Tel Aviv Stock Exchange Splits as TA-35 Outperforms TA-90 Amid Real Estate Decline

For most of the past decade, the TA-90 index was the leading benchmark on the Tel Aviv Stock Exchange, delivering the highest returns and attracting the largest passive investment funds. However, a significant shift has recently occurred, with the TA-35 index overtaking TA-90 for the first time in years. Since the start of the year, TA-35 has surged by 14%, while TA-90 has declined by over 1%. Over the last two years, TA-35’s return reached approximately 114%, compared to about 93% for TA-90.

This reversal is reflected in investor capital flows, as passive funds tracking TA-35 have grown to 18.3 billion shekels, surpassing the 17.6 billion shekels following TA-90. At the end of 2025, TA-90 funds still led with 20.1 billion shekels versus 13 billion for TA-35. The TA-35 index includes the 35 largest companies by market cap, heavily weighted in technology, insurance, and finance sectors, while TA-90 covers 90 large companies excluding those in TA-35, with a strong concentration in real estate and construction stocks.

Real estate shares, especially construction stocks, have suffered sharp declines, with the construction index down 11.5% and the real estate index down 7% since the start of the year, including a 20% drop in the last three months alone. Nearly 25% of TA-90’s weight is in real estate and construction, compared to just 6.6% in TA-35, contributing to TA-90’s underperformance amid negative investor sentiment toward the sector.

Industry experts note that the migration of major insurance companies to TA-35 has strengthened that index, while TA-90’s real estate focus drags it down. Technology stocks, particularly semiconductor companies like Tower Semiconductor, Nova, and Camtek, along with defense firm Elbit Systems, have driven TA-35’s gains, buoyed by AI-related growth trends. TA-35’s higher concentration and larger weight limits (up to 7% per stock versus 2% in TA-90) allow strong performers to have greater impact.

Despite TA-90’s current weakness, some analysts caution against writing it off, highlighting its closer ties to the broader Israeli economy and historical periods when it outperformed TA-35. The TA-125 index is suggested as a balanced alternative for investors unwilling to choose between the two. Liquidity differences also play a role, with about 70% of trading volume in TA-35 stocks versus 20% in TA-90, meaning TA-90 could see sharp corrections if real estate sentiment improves.

Overall, the Tel Aviv Stock Exchange is experiencing a historic bifurcation between its flagship indices, driven by sectoral shifts and investor preferences, with real estate’s downturn reshaping the market landscape.