Israeli Provident Funds Show Resilience Despite June Market Declines

After several strong months in the stock market, June brought negative returns for Israeli provident fund savers, marking only the second losing month this year. Despite the downturn, investors still enjoyed nearly 6% returns in general provident fund tracks over the first half of 2024, a figure typically achieved over a full year. Over the past three years, returns have been even more impressive, reaching 43.2%. The decline in June, averaging a 0.7% loss in general tracks, was largely due to the US-Iran ceasefire agreement, which was perceived as unfavorable for Israel, erasing gains from the "Roar of the Lion" operation. The Tel Aviv 125 index fell sharply by almost 10%, marking the worst month since October 2023.

In contrast, equity tracks showed a strong 9.6% rise since the start of the year, though June still saw a 2.3% average drop. International markets were mixed: the US S&P 500 and Nasdaq fell modestly, while European indices like France's CAC and the Euro Stoxx 50 posted gains, and Japan's Nikkei surged 8.3%. Notably, the S&P 500 index-tracking fund was the only one with positive returns in June, gaining 4.7%, helped by a 6% rise in the US dollar against the shekel, which boosted returns for Israeli investors.

Among fund managers, Altshuler Shaham stood out positively in June due to its high foreign exposure, posting a slight positive return of 0.04% in the general track, while others like Harel and Meitav had losses. However, since the start of the year, Clal Insurance leads with a 7.6% return, followed by Harel and Migdal. Over three years, Analyst and Infinity top the charts with returns near 47%, while Altshuler Shaham ranks lower.

In equity tracks, Altshuler Shaham again showed resilience with only a 0.7% June decline, outperforming competitors who saw drops over 2%. Clal leads year-to-date with 13%, followed by Harel and Mor. Over three years, Clal, Infinity, and Meitav have achieved returns above 80%, with Altshuler Shaham at the bottom.

Pension funds showed a similar June trend but with smaller losses, averaging a 1.1% drop for under-50 tracks. Altshuler Shaham had the smallest decline at 0.2%. Year-to-date pension returns are stronger than provident funds, with Harel leading at 8.6%. Over three years, Infinity, Phoenix, and Clal top pension returns, while Migdal, Altshuler Shaham, and Harel trail.

The June market volatility highlights the importance of diversified investments both domestically and internationally for Israeli savers.