Israeli Provident Funds Deliver Strong Half-Year Returns Despite June Slump and Global Uncertainty

International equity markets have posted impressive gains in the first half of 2026 despite global economic uncertainty, geopolitical tensions, and volatile oil prices. Key indices such as Israel's TA-35 and TA-125 rose by 11.99% and 9.48%, respectively, while the US S&P 500 and Nasdaq increased by approximately 9.55% and 12.8%. However, June saw a market downturn triggered by deteriorating US-Iran relations and renewed geopolitical risks, with Israeli indices falling between 4.71% and 6.86%, and US indices dropping around 1% to 2.8%.

Among the top performers, the ten largest Israeli provident funds achieved an average return of about 9.8% on equity tracks and 5.9% on general tracks for the half-year. Clal Insurance's provident fund led with a 12.95% return on the equity track and 7.55% on the general track, outperforming competitors by several percentage points. Nir Ovadia, Senior Vice President and Head of Member Investments at Clal Insurance, attributed the strong performance to early-year gains in the Tel Aviv Stock Exchange, especially in the first quarter, and strategic portfolio shifts toward Israeli markets and the semiconductor sector.

Ovadia explained that despite the June market reversal, Clal adjusted its portfolio by reducing exposure to Israeli assets when valuations appeared stretched and geopolitical risks heightened. The fund also benefited from non-traded investments, including power stations, which contributed to solid returns. Looking ahead, Ovadia expects continued significant investments in artificial intelligence, semiconductors, data centers, and electricity sectors. He views recent AI-related market corrections as healthy adjustments rather than bubble bursts and anticipates technology and semiconductor sectors will remain strong.

Nevertheless, Ovadia highlighted ongoing risks such as escalating global geopolitical tensions, potential renewed US-Iran conflict, US inflation uncertainties, and high equity valuations. He recommended maintaining equity positions with a focus on technology and semiconductors while employing necessary risk protections and diversification beyond the dominant tech giants.