Following the increase in interest rates, the public is switching to financial funds – these funds have become in demand, but the category preferred by the public is still 20/80 funds. The logic of these funds is that they are divided according to the chance-risk ratio between investing 80% of the money invested in the bond channel, which is considered solid (this is not always the case, for example when interest rates rise), and the remaining 20% in the stock track, because historically stocks are The investment channel that yields the highest return in the long term, but is also considered the most volatile.
There are other funds with a slightly more conservative 10/90 split, for those interested in less risk (but also less potential for return) and on the other hand, 30/70 which is considered a bit more aggressive. In general – the younger you are and your investment term is decades, the investment managers will say that you can take a greater risk, because there are more years of chance for a better return on shares and correction of falls in the markets. But what usually happens is that young people are more risk-averse, while adults are more willing to take risks. In any case, these funds that divide the money between stocks and bonds are considered the most accepted investment channels.
The year so far has not been easy for the mutual funds, and the 20/80 funds in particular. The declines in the markets and the increase in yields in the bond market (increase in yield = decrease in the price of the bond which means a loss for those who hold it) mean that the funds fail to provide a good yield. In fact, all but one of the funds produced a negative return since the beginning of the year.
Out of over 70 funds operating in Israel in the category, only one fund achieved a positive return, and it also achieved a zero-negative return, when management fees are deducted.
In everything else – the management fees collected were much higher than the returns.
Here are the returns:
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