Flagship index makes history: Real estate stocks plummeted and the Tel Aviv Stock Exchange split in two

For most of the last decade, the TA-90 index was the undisputed winner of the Tel Aviv Stock Exchange. Among the flagship indices, it presented the highest return and the largest volume of tracking assets. However, recently the situation has reversed, and for the first time in years, an unusual gap has opened between the two flagship indices on the exchange - the TA-35 and the TA-90, with the TA-35 taking the lead.

Since the beginning of the current year, the TA-35 index is completing a sharp rise of 14%, while the TA-90 index is recording price declines of more than 1%. Over the last two years, the gap is even larger, standing at about 114% for the TA-35 index compared to about 93% for the TA-90 index.

Investors in Tel Aviv are voting with their feet

Data that reached Globes shows that this reversal in returns is now also translating into a historic change in investor capital flows. The volume of passive funds tracking the TA-35 index has surpassed that of the TA-90 index for the first time since 2023. While at the end of 2025, about 20.1 billion shekels were tracking the TA-90 index compared to only 13 billion shekels in the TA-35, today the volume of funds tracking the TA-35 has jumped to 18.3 billion shekels, while the money tracking the TA-90 has shrunk to 17.6 billion shekels.

This reverse movement can be seen most clearly in the fundraising data. According to stock exchange data, funds tracking the TA-35 index have raised an impressive sum of 3.5 billion shekels since the beginning of the year, while funds tracking the TA-90 have redeemed 2.4 billion shekels.

Construction stocks are no longer immune to the slowdown

"The indices have changed a lot recently. Today's indices are not the same indices as before. The insurance companies that have all moved to the TA-35 (Menora Mivtachim, Clal, and Migdal, which joined Phoenix and Harel) are a good example of this," says Moshik Yosefovich, manager of Israeli stocks at Migdal Insurance.

On the other hand, he explains that "the TA-90 has become more of a real estate index and it is pulling it downwards." Indeed, most of the real estate stocks traded on the stock exchange, certainly construction stocks, are traded in the TA-90 index. The construction index has fallen by 11.5% since the beginning of the year and the real estate index (which also includes income-producing real estate stocks) has fallen by 7%. In fact, in the last three months alone, the construction index has fallen by 20%. If six months ago it seemed that real estate stocks were immune to the slowdown in sales, now it seems that the market is less optimistic about them.

"Every fourth shekel in the TA-90 is invested in real estate"

To highlight the difference, Yaniv Pagot, VP of Trading at the Stock Exchange, adds that "almost every fourth shekel in the index is invested in real estate and construction, while in the TA-35 the sector accounts for about 6.6%. This is a significant gap, especially in a period when investor sentiment towards the industry is negative."

According to Yosefovich, the growth engines of the TA-35 index include "the dual-listed stocks, led by chip stocks Tower, Nova, and Camtek, which pulled the index upwards following the AI revolution, and one must remember that each of them has a high weight in the index." Tower with almost 8%, Nova with 5%. Beyond the chip stocks, "Elbit Systems also starred and helped the index rise." Its weight is also 7%. Therefore, he explains that "the strong performance of the dual-listed companies managed to compensate for the weakness recorded in bank stocks at the beginning of the year. Even without the banks, the index is managing." Pagot reinforces that "about a third of the TA-35 index is composed of technology companies, compared to only about 22% in the TA-90. In the TA-90, there is a higher weight for software companies, some of which are more exposed to AI threats, while the companies that benefit more from technological trends are actually in the TA-35."

Pagot also explains that the advantage of previous years has become a disadvantage this time in the TA-90. "The weight limit of each stock in the TA-90 is 2%, compared to 7% in the TA-35, and it also has many fewer stocks, meaning the TA-35 is much more concentrated, and large stocks that are in positive momentum can grow to a significant weight within the index. The TA-90 is less dependent on individual stocks. The broad diversification and weight limit in the TA-90, which are supposed to reduce risk and dependence on a single stock, have actually become a disadvantage in the current period. However, in the long term, diversified indices have many advantages."

Yosefovich estimates that this trend will continue. According to him, "since the insurance companies moved to the TA-35, there is nothing to pull the TA-90 upwards during periods of stock market gains. The TA-90 index needs an interest rate cut for real estate stocks to perform." He also adds that "the TA-90 is much less liquid than the TA-35 (about 70% of trading takes place in TA-35 stocks and only 20% in TA-90 index stocks), therefore due to the low liquidity, as soon as there is a change in sentiment in real estate, the index will be able to aggressively correct at least part of the gap, even if not close it entirely."

Pagot thinks otherwise, "I wouldn't write off the TA-90. The index is much more identified with the Israeli economy, and there were long years when the TA-35 lagged behind the TA-90. In those years, many investors lost faith in the TA-35. If there is one thing we have learned from the trend in the S&P 500 index, it is that chasing hot trends in the capital market is usually destined for failure. A stock portfolio should be balanced. Sometimes, precisely when investors develop antagonism towards a certain index, the best opportunities for the long term are created. The TA-125 index provides a solution for those who do not want to choose between them."