Altshuler Shaham's Diversified Strategy Mitigates June Losses Amid Tel Aviv Market Drop

After two years of sharp gains totaling 130%, the Tel Aviv Stock Exchange experienced its weakest month since October 2023, with the TA-125 index falling nearly 10% in June. This decline was triggered by the ceasefire in the US-Iran conflict, perceived negatively by the market for Israel, which dampened returns for pension and training fund savers.

Despite the local downturn, global diversification helped cushion losses. The US S&P 500 and Nasdaq indices fell only 1.1% and 2.8% respectively, while the Israeli shekel weakened against the dollar by almost 6%, offsetting much of the local market decline. The first half of 2026 still showed strong returns, with general investment tracks averaging 5.9% year-to-date, exceeding typical annual returns of around 5% when excluding the exceptional 2024-2025 period.

Among insurers, Clal Insurance led with a 7.6% return in general tracks, followed by Harel (7.1%) and Migdal (6.2%). Altshuler Shaham, despite a 0.7% drop in the local market, outperformed peers in June by maintaining a slight positive return (0.04%) in the general track due to higher foreign equity exposure. In equity tracks, Altshuler Shaham posted a smaller decline (-0.7%) compared to competitors, supported by global diversification and currency gains.

Altshuler Shaham's investment approach emphasized global spread, exposure to technology and semiconductors, and a reduced weighting in the so-called "Magnificent Seven" tech giants, which fell 10% in June. The firm also benefited from investments in AI companies like Anthropic and the Israeli startup Armis. Clal's Nir Ovadia highlighted strong performance in non-tradable assets and local tech sectors.

Market experts from Menora Mivtachim and Altshuler Shaham agree that Israel's market outperformance has likely peaked, with future gains requiring new narratives amid stable but high valuations. They expect continued strength in chipmakers and technology due to ongoing large-scale investments in AI and electrification. Inflation data from the US also suggests a less aggressive Federal Reserve rate hike path, supporting bond returns. The dollar-shekel exchange rate is expected to stabilize near current levels.

Overall, the June correction underscored the importance of diversified portfolios combining local and global assets, currency hedging, and selective sector exposure to navigate geopolitical and market volatility.