Investment breakthrough: Portfolio managers in Israel to be allowed to publish yields
Since 2011, the Israel Securities Authority has prohibited portfolio managers from publishing their yields to the general public, restricting them to personal consultations. Now, the regulator is shifting course: under a new draft, all licensees—investment advisors, marketers, and portfolio managers—will be permitted to publicly disclose past yields, provided they adhere to uniform standards.
The Israel Securities Authority has announced a major development in the investment world, allowing all licensed investment entities to publish yield data. This decision marks a departure from the long-standing practice where portfolio management companies were restricted to disclosing performance figures only during personal consultations.
According to a new draft currently being presented by the Israel Securities Authority for public comment, "all licensees—investment advisors, investment marketers, and portfolio managers—will be able to publish past yields to the public." The regulator emphasizes that yield publication will be carried out in accordance with a uniform, controlled methodology "designed to prevent selective or misleading presentation."
The Authority notes that this move will serve as a valuable marketing tool for professionals and, more importantly, provide potential clients with a primary tool for easily comparing different service providers. This represents a sharp change in direction, addressing one of the most significant criticisms financial managers in Israel have leveled against the regulator for years.
Since 2011, the Israel Securities Authority has prohibited the public disclosure of yields. Furthermore, media outlets attempting to publish such data were often cautioned by the entities themselves to avoid doing so, fearing repercussions from the Authority, which previously viewed such actions as a violation of its instructions. The Authority explained the need for change, stating: "A regulatory gap has been created. Existing reporting obligations do not allow for comparison between service providers, while the public is exposed to unregulated yield publications without a uniform standard."
Under the Authority's draft, yields will be divided into five-year periods, or 12-month periods where sufficient data is unavailable. Portfolios will be classified into three risk levels (low, medium, and high), with a "representative portfolio" published for each level alongside a standard deviation index to illustrate the relationship between yield and risk.
Inbal Pollak, Director of the Investment Department at the Israel Securities Authority, commented on the initiative:
"The new instruction is a significant step towards strengthening transparency and competition in the capital market, while ensuring a uniform and controlled standard in the presentation of licensee performance. We are working to reduce existing information gaps and allow the investing public to base their choice of a licensee on reliable, comparable data. Alongside this, we have ensured a proper balance that protects the public from deception, without harming the unique and personal nature of professional service."
According to the regulator, publishing past yield data allows licensees to present objective performance parameters, contributing to improved competition and reducing the leakage of clients to unregulated entities. As yield publication could potentially be used to create false expectations or blur the link between risk and return, the proposed regulation aims to balance transparency with the necessity of protecting the public and ensuring reliable data presentation.
