Yelin Lapidot Tops July Returns in Israeli Provident Funds Despite Negative Yearly Trends

In July, Israeli provident funds (Kranot Hishtalmut) generally posted negative returns, with the general track recording a decline of about 0.5% and the equity track falling approximately 0.9%. However, the S&P 500 track is expected to rise by around 2.4%, mainly due to the strengthening of the US dollar against the shekel, which added roughly 3.2% to shekel-based returns despite the index itself declining in dollar terms.

Yelin Lapidot's general track is projected to lead the July rankings but remains last in the year-to-date standings after reducing equity exposure in recent months. Altshuler Shaham is expected to top the equity track for July, showing improved returns recently, though it must maintain this performance to climb into the top third of the annual rankings. Harel is likely to report weaker results in July following relatively strong returns earlier in the year.

Since the start of 2026, Clal leads the general track with a 6.8% return, followed by Mor at 6% and Harel at 5.9%, with the average general track return at 5.4%. The same three firms lead the equity track with Clal at 11.2%, Mor at 10.3%, and Harel at 10%. Provident funds offer significant tax benefits, including tax-free deposits, earnings, and withdrawals after six years.

Employees typically contribute 2.5% of their salary, with employers adding 7.5%, up to a monthly salary cap of 15,712 shekels, allowing a maximum annual deposit of about 18,900 shekels. Self-employed individuals can deduct 4.5% of taxable income up to 13,203 shekels in 2026 and deposit up to 20,566 shekels annually with tax-free capital gains after six years. Those with small self-employment income can open a fund if they maintain active business status, though administrative costs may reduce benefits for low-income activities.

Funds become liquid after six years, and savers can continue to accumulate tax-free returns. This makes provident funds particularly advantageous for self-employed workers seeking long-term tax-efficient savings.