The Altshuler Shaham investment house is expected to be at the top of the returns table in the January summary, which will end up with positive returns, mainly due to the exposure abroad. Altshuler believes over the years in exposure to foreign markets and hope that 2023 will brighten the face of the investment house, which ended the past year at the bottom of the ranking. stock Altshuler Shaham Jumps by about 8% after losing about half of its value in the last year.
● The stock exchange shows: a quarter of the trading – in bank shares; Only crumbs for those not in TA-35
● Is the Tel Aviv Stock Exchange disconnecting from Wall Street? There are also investment opportunities. This is how you will recognize them
According to the assessment of the Meitav investment house, the provident funds and the large general training funds registered an average nominal (gross) return of 2.5% in January, while the equity routes presented a positive return of 4.3% on average, with some even reaching a return of 5% in January. For comparison, the past year ended the general courses in the training funds with a negative return of about 8%, and the stock ones with a double negative return of about 16%.
Alongside the provident funds, the pension funds also opened 2023 with a nice positive return. The flagship routes, for those aged 50 and under, presented a return of 2.6%, the routes for those aged 50 to 60 recorded an average return of 2.3%, and the more solid routes for those aged 60 and over with an average return of 1.8%.
A good month for foreign stocks
The uproar surrounding the legal plan promoted by the government caused a shake-up in the market and sharpened the gaps created in recent months in returns between the world’s leading stock exchanges, led by the American capital market, and the local one.
While the TA 35 index remained unchanged in January and the TA 125 index rose 0.5%, the leading indices on Wall Street rose impressively, with the Nasdaq closing the month with a 10.7% increase, the S&P 500 adding 6.2% and the Dow Vence registered a more moderate increase of 2.8%. And in Europe the leading indices concluded January with high single-digit returns.
As mentioned, these sharp increases allowed the long-term savings institutions in Israel to record positive returns in the first month of the year, after finishing 2022 with significant negative returns.
Although it is clear that the exposure to markets abroad is what made the positive returns possible, the institutional bodies that manage the public’s long-term savings refuse to state that this is the beginning of a trend that will also characterize the coming months, and they do not even address the question of whether they will expand the movement of funds abroad on The local stock exchange account in the near future.
However, a senior official in the Israeli capital market said in a conversation with Globes that in practice this is already happening. “Because of the excess money that the institutional bodies have, most of the investments in equity are made abroad, and the institutions currently invest only 20% in Israel. So that on average 65-70% of their equity is already abroad,” he says.
From an analysis by the Smartball company, which monitors and analyzes investments of institutional entities, it appears that in the third quarter of last year Altshuler Shaham actually reduced his holdings of long-term savings products in shares abroad, to a considerable extent of 1.8 billion dollars, and remained with an investment of 3.1 billion dollars. The person who holds the largest investment in shares abroad is Menorah Mivathim ($5.7 billion), followed by Clal ($5.5 billion) and Phoenix ($3.7 billion).
The industry preferred by the Israeli savings institutions is technology with holdings of $10.4 billion as of the end of the third quarter, despite sales amounting to $1.5 billion and a loss of value due to the declines in the markets during that period of an additional billion dollars. This large holding is expected to pay off in January, when Nasdaq, the index of technology stocks, led the returns as mentioned.
After that, the Israeli entities invest in industry, where they increased the aggregate investment by about $660 million, and in finance, where in this branch the holdings amounted to $2.8 billion after the sale of shares amounting to $1.2 billion in the third quarter.
Altshuler Shaham, the largest holder of the bonds
In addition to the exposure to shares abroad, other investments that have helped the entities that manage the savings products in obtaining returns are bonds. In light of the increase in interest rates in the past year, investment managers have repeatedly emphasized that after years in which the interest on the bonds of the good companies offered a zero return, it is now possible to obtain returns Adequate in the world of bonds without investing in companies with a high risk profile. This is about returns that also range around 5%-6% percent.
Indeed, for example, an examination of the exposure of the training funds to the bond sector reveals a significant increase during 2022. For example, the training funds of the Moore Investment House in the general route, which led the table last year, reveals that the value of the assets held in marketable government bonds jumped by about 150 % to 2.5 billion shekels (increase from 15% in the portfolio to 19% within the portfolio), while the holding in tradable corporate bonds doubled itself, also to about 2.5 billion shekels. In contrast, the holding in shares increased by only 37% to NIS 2.2 billion, with the share of stocks in the portfolio reduced from 23.6% to 16%.
In Migdal, which also finished at the top of the 2022 returns, there was an increase in exposure to bonds, but it was more moderate. The main increase, of 13%, was recorded in corporate bonds, and the sector’s share of this in the investment portfolio of the general training course increased from 12.5% to 14%, while the share of stocks decreased from 36.2% to 30.7%.
When considering the bond holdings in Israel, Altshuler Shaham is the largest holder, with bonds amounting to approximately NIS 60 billion. However, during the third quarter he sold bonds amounting to almost NIS 11 billion. He is followed by Harel with holdings of Israeli bonds (government, corporate, convertible and institutional bonds) amounting to approximately NIS 50 billion and a third of Amitim, the manager the old pension funds in the arrangement, with holdings of NIS 44.6 billion.
Also in bond holdings abroad, Altshuler Shaham is the largest holder of long-term savings products, with holdings of $2.9 billion, followed by Migdal (2.7 billion) and Phoenix and Kval with $2.5 billion each. Let’s remember that these are bonds that are purchased for several years, when today the bonds for a short period offer a higher yield than for the long term. It will be interesting to see which of the entities renewed their investments in this product when the interest rates continue to rise, thus achieving a high return for savers in the coming years as well.
Altshuler Shaham’s bad year
In the stock route of his training fund, Altshuler Shaham ended 2022 with a negative return of 19%, which was so deep that the route also turned into a negative return in the summation of the last three years. In the general, more solid trajectory, Altshuler Shaham’s negative return stood at 11.3%, the only one with a double-digit negative return among the major governing bodies in 2022. These short returns caused the public to transfer a large part of the savings from Altshuler Shaham to competitors, and they managed to transfer to them almost NIS 50 billion from the provident assets of Israel’s largest investment house. The result is that at the end of the past year, Altshuler Shaham managed NIS 144 billion, about a third less than he managed in October 2021, when he merged into it about NIS 48 billion in the assets he purchased from Psagom.
About two weeks ago, Yair Levinstein, owner and CEO of Altshuler Shaham Finance, said that “the reason for our large exposure to the US market is the many years in which the American economy, and not without reason, beat all other economies by a large margin, and in the next 20 years, it is the one that will attract the The global economy. And when a decision has to be made regarding the geographic allocation of transactions, we believe that there should be excess exposure to the US.” In the same conversation, he explained that this strategy did not work in the last year and this is the gap created for Altshuler Shaham in front of the market, after until October the Tel Aviv Stock Exchange performed better in front of the world.
Altshuler himself commented last June on his strategy to continue investing in shares, and especially in exposure abroad. “20-25 years ago all the players in the market had a portfolio of 100% in Israel. There was no such thing as going abroad until 2006, when we were the first to go there. Look at that and ask why go abroad, and today all the bodies abroad. I’m sure that in five or six years, maybe with the exception of one body or another, every The Israeli investment management bodies will be exposed 80-75% abroad,” said Altshuler at the conference he attended.
In response to the question of whether the Israeli market is too dangerous in his eyes, a claim that is now taking on new validity following the series of attacks that took place last weekend, and led to a decline in the markets together with the markets’ reaction to the legal reform, Altshuler said that it is about risk management.
“The question is not whether the stock market in Israel will do 2% better than the United States, or whether the United States will do half a percent above Israel. The question is how to manage general risks. We are in an area that is geopolitically problematic. What to do if Israel is not one of the economic powers The largest in the world. It is true that it is a very strong power, but its share within the international markets is very small. Therefore, to say that 20% of the investments in Israel is little? I think completely the opposite, that it is a lot,” he explained at the time.