Training funds (Keren Hishtalmut): July performance and investment insights
The return forecast for training funds in July is approximately -0.5% for the general track and -0.9% for the stock track. Meanwhile, the S&P 500 track is expected to rise by about 2.4% due to the strengthening of the dollar. We analyze fund performance and the significant tax advantages of this savings instrument.
The training fund in the general track managed by Yelin Lapidot is expected to finish July at the top of the rankings, despite currently holding the last position in year-to-date performance. The investment house reduced its exposure to stock markets over the past six months, a strategy that paid off last month. Altshuler Shaham is expected to lead the stock track, as returns have improved in recent months; however, they will need to maintain this momentum through the end of the year to improve their annual standing and reach the top third of the table.
Harel is expected to report weak data for July following relatively strong returns earlier in the year. The S&P 500 track is projected to record a positive return of approximately 2.4% for July, even though the index itself declined in dollar terms. This discrepancy is explained by the strengthening of the dollar against the shekel, which added about 3.2% to the shekel-denominated return.
Year-to-date, Clal leads the general track with 6.8%, followed by Mor with 6% and Harel with 5.9%. The average return in the general track stands at 5.4%. The same trio leads the stock track: Clal (11.2%), Mor (10.3%), and Harel (10%).
A training fund offers savers the most significant tax benefits among all financial instruments, with no tax on deposits, profits, or withdrawals. These funds are available to both employees and the self-employed, and individuals who hold both statuses can benefit from both types of funds simultaneously.
For employees, the standard contribution is 10% of the salary (7.5% from the employer and 2.5% from the employee). The tax benefit applies to monthly salaries up to 15,712 shekels, allowing for a maximum eligible annual deposit of approximately 18,900 shekels. For the self-employed, there are two primary benefits: a contribution of 4.5% of taxable income is recognized as an expense (up to 13,203 shekels in 2026), and annual deposits of up to 20,566 shekels accumulate profits exempt from capital gains tax after six years of seniority.
Opening a fund for the self-employed is advisable provided there is actual business activity, as administrative costs such as accounting and reporting can reduce the value of the benefit for businesses with negligible income. After six years, the funds become liquid, but they can remain in the account to continue accumulating tax-exempt returns.
