Altshuler Shaham Founder Steps Back as Firm Restructures Amid Client Exodus

Altshuler Shaham, Israel's third-largest investment house, is undergoing significant management changes to address one of the most severe financial crises in the country's investment sector in the past decade. Over the last five years, the firm lost clients managing 140.3 billion shekels, dropping from the top position in pension funds to third place and surrendering about 20% of its market share.

Founder Gilad Altshuler publicly acknowledged reducing his daily management involvement, shifting from a vertically centralized investment approach to a more balanced, decentralized structure. He now focuses solely on strategy, delegating tactical decisions to senior heads of investment sectors, who operate independently within their domains. This reorganization, initiated over the past two years, includes regular performance reviews every two weeks to assess the impact of investment decisions.

The impetus for change came amid intense market pressures, such as the tariffs imposed by Donald Trump in early 2022, which required swift responses across currencies, bonds, and equities. Chief Investment Officer Lea Freminger advocated for dispersing responsibilities, a move Altshuler supported. The restructuring also involved key appointments: Freminger as head of pension and provident fund investments, Yotam Ironi leading foreign equities, Shimon Uliel heading Israeli equities and corporate bonds, and Nadine Budo-Trachtenberg, former Bank of Israel deputy governor, joining as chair of the investment committee to challenge strategic assumptions.

Uliel, who joined from Analyst after nearly 20 years, noted the complexity of today's markets demands specialization and autonomy in decision-making. Despite volatile conditions, especially since the recent war, he expressed confidence that the firm’s adjustments will restore professional decision-making and improve returns over time.

Altshuler Shaham’s crisis began in 2021, following risky investments in China and a contrarian stance on interest rate hikes in the bond sector, which led to underperformance and client departures. The flagship provident fund trails the industry average with a five-year return of 33.1% versus 46.2%. The firm’s stock market value stands at 1.3 billion shekels, lagging behind the 222% rise of the Tel Aviv financial index over three years. To regain momentum, Altshuler Shaham is expanding into credit and alternative investments to diversify income sources. A potential future merger of the investment house with its pension fund subsidiary could also enhance the company’s market value.