Israeli Regulator Allows Investment Managers to Publicly Share Past Portfolio Returns to Boost Transparency and Competition

The Israeli Securities Authority has issued a draft directive permitting investment portfolio managers to publicly disclose past returns of the portfolios they manage. Previously, such performance data could only be shared privately and verbally with clients. The new rules standardize how returns are presented, including fixed time frames and risk classifications, to prevent manipulation and enable easier comparison between managers.

The directive applies to investment managers, advisors, and marketers, allowing them to publish returns through newspapers, the internet, television, and billboards. Returns must be calculated using a standardized formula over a five-year period or at least 12 months if insufficient history exists. Portfolios will be categorized into three risk levels (low, medium, high), with a representative portfolio and standard deviation index published for each to illustrate risk-return balance. To ensure data reliability, all three risk levels must be disclosed if at least five portfolios exist in each category.

Currently, nearly half a trillion shekels are managed in investment portfolios by a few large firms, with the sector experiencing significant consolidation and declining competition. In 2025, the industry grew by 18%, mainly due to strong capital market returns, reaching about 94,000 client portfolios, an increase of 8,000 from 2024. Most new clients (6,500 of 7,000) joined large firms managing over 1,000 portfolios each. The top ten firms now control approximately 72% of assets in the sector.

The regulator's goal is to increase transparency and competition by providing investors, both large and small, with a marketing tool and an easy way to compare service providers. The draft was published for public comment, aiming to replace the 2011 rule that banned public performance advertising and limited disclosure to personal conversations with investment managers. The authority noted that existing reporting requirements do not allow effective comparison, while the public is exposed to unregulated performance advertisements without uniform standards.