Economy03:05 · 8h ago

Investment Expert Warns Israelis Against Overconcentration in US and Domestic Stocks

Globes

Translated & summarized from Globes by baba

Key points

01Israeli investors often overconcentrate 80% of assets in one stock, mainly in US and Israeli markets.
02Karni Family Office manages over 9.5 billion shekels for diverse clients including tech professionals and wealthy families.
03Recent market corrections are healthy after years of AI-driven double-digit returns, says Karni.
04Karni recommends diversifying portfolios with emerging markets like South Korea, India, and Latin America.
05He advises investing in second- and third-tier semiconductor companies, including European firms like BE Semiconductor and ASML.
06Ayalon Insurance is highlighted as a promising Israeli stock with strong growth in pension funds.

In this story

People

Dror Karni, Tamir Fishman, Tamir Hershkovitz

OrganizationsKarni Family Office, Bank Hapoalim, Mivtachim, Mossad, Mitav, EEM ETF, Ayalon Insurance, Mor Investments

PlacesIsrael, United States, South Korea, Taiwan, India, Latin America, Brazil, Europe

The story · English

Dror Karni, a 49-year-old investment professional and founder of Karni Family Office, emphasizes the importance of diversified portfolios beyond Israel and the US. Having started his passion for finance early, Karni now oversees assets exceeding 9.5 billion shekels for clients ranging from tech professionals to wealthy families aged 50 to 75.

Karni observes a psychological trend where investors grow anxious despite strong market performance, noting that recent market corrections are healthy after years of double-digit returns fueled by the AI revolution. He highlights that despite high US market valuations, long-term growth remains likely due to substantial corporate investments in technology infrastructure.

However, Karni criticizes many Israeli investors for concentrating 80% of their portfolios in a single stock and focusing mainly on US and Israeli markets. He urges expanding exposure to emerging markets such as South Korea, Taiwan, India, and Latin America, which offer growth potential through demographics and commodity cycles.

For conservative investors, Karni recommends a portfolio with 5% in Israeli stocks (TA-35), 15% in US indices (S&P 500, Nasdaq, Russell 2000), 5% in emerging markets via EEM ETF, and the remainder in Israeli corporate and government bonds. Aggressive investors should increase equity exposure accordingly.

Karni also advises looking beyond well-known chipmakers like Nvidia to second- and third-tier semiconductor companies, including European firms such as BE Semiconductor, ASML, Infineon, STMicroelectronics, Soitec, and ARM, which are poised to benefit from AI and data center growth.

Among Israeli stocks, Karni highlights Ayalon Insurance for its strong growth potential in pension funds and savings products, comparing its trajectory to past successes like Mor Investments. Conversely, he cautions about the residential real estate market in Israel, citing falling prices and sales volumes despite lower interest rates.

Summary: Dror Karni, head of Karni Family Office, warns Israeli investors against overconcentration in US and Israeli stocks and advocates for broader diversification including emerging markets and lesser-known tech firms. He provides tailored portfolio recommendations and highlights opportunities and risks in local insurance and real estate sectors.

Read the original at Globes