Israeli Training Funds Post Negative October Returns Amid Political Uncertainty
Israeli training funds and pension tracks posted negative returns in October, pressured by Tel Aviv stock market declines and political uncertainty following elections, while US dollar gains cushioned international assets.
October proved challenging for Israeli financial markets, with the Tel Aviv Stock Exchange dropping sharply amid political uncertainty following national elections. The benchmark Tel Aviv 35 index shed 3.5%, while Wall Street's S&P 500 retreated by approximately 1%. However, a sharp surge in the US dollar against the shekel provided a buffer for savers exposed to US equity tracks, yielding positive returns on international holdings.
General and Equity Tracks Hit by Local Volatility
Amid these headwinds, most investment houses posted negative figures for October. Across 11 tracked firms, the general training fund track recorded an average negative return of 0.2%, though year-to-date figures remain positive at 6.6%. Mor Investment House stood out as the sole major performer to buck the trend, registering a positive return of 0.4%, followed by Infinity which remained flat. Other major institutions saw declines ranging from 0.2% for Yelin Lapidoth and Meitav Investment House to 0.5% for Menora Mivtachim Holdings. Over a three-year horizon, investors in this track enjoyed cumulative gains ranging from 41% at Harel Insurance & Finance to 51% at Clal Insurance Enterprises Holdings.
In the dedicated equity track, all surveyed institutions finished in negative territory, with an average loss of 1.1%. Mor Investment House and Infinity mitigated the downturn best, each limiting losses to 0.4%. Conversely, the steepest declines were recorded by Harel Insurance & Finance (1.8%), Altshuler Shaham (1.7%), and Menora Mivtachim Holdings (1.4%). Despite the monthly setback, year-to-date equity returns average 11%, with three-year gains averaging 84%. Meanwhile, tracks specifically tracking the S&P 500 benefited from currency dynamics, posting an average monthly gain of 2.4%.
Pension Funds and Expert Outlook
Savers in pension tracks for individuals under 50 also experienced a difficult month, averaging a 1.2% decline in October while maintaining an 8.2% gain year-to-date. Clal Insurance Enterprises Holdings led the pension category with a modest 0.6% drop, followed by Migdal and Menora Mivtachim Holdings. Over a three-year period, pension savers achieved an average cumulative return of 53%.
Carmel Kanny, Chief Investment Officer for provident funds at Yelin Lapidoth, pointed to the combined pressures of domestic political developments and global tech volatility as key market drivers.
"Following a prolonged period of rising government bond yields and outperformance by the local bourse, October was characterized by underperformance of the Israeli market due to post-election political uncertainty. Looking ahead, political unpredictability and budgetary challenges stemming from defense needs will continue to weigh on the local market."
Kanny emphasized that current conditions demand disciplined, flexible management that balances global diversification with targeted market opportunities. He also warned that significant downward valuations may materialize in unlisted assets, particularly within real estate and small-to-mid-sized enterprises, following recent corrections.
