S&P 500 Fund Outperforms Amid Market Declines in July
July saw continued volatility in global markets, impacting medium- to long-term savings performance. Meitav Investment House reported that general and equity tracks in provident funds and advanced training funds ended the month with negative returns for the second consecutive month. However, the S&P 500 index fund was the only track to deliver positive returns for the second month in a row despite declines on Wall Street.
According to Avi Berkovitz, deputy chief investment officer at Meitav Gamel and Pension, July experienced price drops in global equity markets, including the US and Japan, as well as declines in Israeli government bonds, which contributed to the negative returns. The depreciation of the Israeli shekel against the dollar helped mitigate these losses. Meitav estimates that general provident and training funds posted an average negative return of 0.5%, while equity tracks declined by 0.9%. In contrast, the S&P 500 track gained approximately 2.4% in shekel terms, benefiting from a 3.2% shekel depreciation despite the index itself falling about 0.8% in dollar terms.
The Israeli stock market showed mixed results in July, with the TA-35 rising 0.7%, TA-125 up 0.3%, and TA-90 falling 0.8%. US indices declined, with the Dow Jones down 0.2%, S&P 500 down 0.8%, and Nasdaq dropping sharply by 4.2%. Yet, when measured in shekels, these indices gained about 3.2%. Since the start of the year, the equity and general tracks have outperformed the S&P 500 track, with returns of 8.8% and 5.4% respectively, compared to 4.9% for the S&P 500 track, reflecting the shekel's strengthening earlier in the year.
Overall, global equity markets rose since the beginning of the year, with the TA-35 up 12.8%, TA-125 up 9.8%, and TA-90 down 0.6%. In the US, the Dow Jones and S&P 500 each increased by 8.6%, and the Nasdaq by 8.1%. However, the weakening of the dollar against the shekel reduced these returns by about 3.7% in shekel terms. The recent gains in the S&P 500 track come after a prolonged period of underperformance relative to other tracks due to the shekel's strength.
