Israeli Investors Eyeing S&P 500 Return Amidst Local Market Stagnation
Translated & summarized from Globes by baba
Israeli investors are showing signs of returning to the S&P 500 index as the local stock market stagnates, reversing a trend that saw funds move to Israel after September 2024's "Beepers Operation." Recent performance and a strengthening U.S. dollar have boosted the S&P 500's appeal, leading to reduced outflows and positive net accumulation in related investment funds. Financial experts advise against market timing, recommending diversified, long-term investment strategies.
The story in 6 lines · by baba
- Israeli investors are reconsidering the S&P 500 index due to local market stagnation.
- A shift back to the S&P 500 follows superior U.S. market returns since mid-2027.
- The "Beepers Operation" in September 2024 previously caused a major shift to Israeli markets.
- Outflows from S&P 500 funds have slowed, with net accumulation turning positive.
- A strengthening U.S. dollar is also contributing to the S&P 500's renewed attractiveness.
- Experts warn against market timing and advocate for diversified, long-term investment strategies.
Israeli investors are reportedly reconsidering a return to the S&P 500 index after a period of significant investment in the local stock market. For years, Israeli pension, provident, and study funds funneled substantial amounts, reaching approximately 150 billion shekels between 2023 and 2025, into the S&P 500 due to its superior returns compared to domestic indices. This trend saw over 300 billion shekels accumulate in investment vehicles tracking the U.S. index.
However, the situation shifted following the "Beepers Operation" in Lebanon in September 2024. Israeli investors observed the local stock market's performance outpace the S&P 500, leading to a reversal where funds were redirected back to Israel. Since mid-2025, an estimated 33 billion shekels have exited Israeli pension and provident funds that were invested in the S&P 500.
Recently, the trend appears to be changing again. Since mid-2027, the S&P 500 has once again shown higher returns than the stagnant Israeli market. This has led to a noticeable slowdown in the outflow of funds from S&P 500-tracking investments. Israel Atia, CEO of the Center for Financial Planning, noted that outflows have decreased from 3-5 billion shekels monthly to 1.3 billion shekels in the past two months, with net accumulation turning positive in August and September.
Institutional fund managers are also reporting a shift, with many now moving funds abroad due to high valuations in the Israeli market and uncertainty surrounding upcoming elections and the security situation. The strengthening U.S. dollar against the shekel, up 9% in recent months, is also contributing to the S&P 500's renewed appeal, bolstering returns for those invested in the index.
Experts advise caution against market timing, emphasizing the importance of diversified investment strategies aligned with long-term goals, risk tolerance, and asset allocation rather than chasing recent performance. While some see a stabilization and potential shift back to the S&P 500, others caution that it is too early to declare a full comeback, citing ongoing political and security uncertainties.