Size does not always indicate quality, not even in this case. The largest mutual funds in Israel focus mainly on bond funds, or those that are divided between the majority of bonds (between 70% and 90%) and a minority of stocks (10-30%), and do not stand out positively in any way, despite the massive influx of Israelis to them Funds.
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We examined the largest mutual funds in Israel – what do they offer to customers? What are their achievements? And why do they attract so much money? At least the last question remains a mystery for now.
Especially things are said about Moore. The company, which does not stand out negatively at all, but is also not particularly impressive for the better, is the leader in terms of the volume of funds managed in quite a few categories. Lamore is the largest stock investing trust fund in Israel, the largest flexible, the largest 1090 fund, and also in the other categories it scores relatively high in terms of the volume of funds managed. why? Not clear, but kudos to the marketers.
So who are the largest mutual funds in Israel? First, we note that we ignored the financial funds that hold 3 of the 4 largest funds (Meitav Kasfit is the largest without competition and manages NIS 4.3 billion). We also added the largest equity mutual fund (Israeli stocks), even though there are bond funds larger than it that did not enter the table. Below are the largest non-monetary funds in Israel:
Despite the declines in the bond market, Israelis still largely prefer solid funds, or at least those that are considered solid. Those that invest all or the absolute majority of the money in the bond market, but “dip” in a few stocks, and this even if we ignore the most solid funds – the finances. In fact, the equity fund was not supposed to be in the largest table at all and we included it “graciously” since there are other bond funds that are larger than it.
In the area of government funds, for some reason, a fund with a very specific investment category – medium-linked government bonds, which is among the five largest funds in Israel, leads the way. Investing in this specific category in a period of rising interest rates is not without logic and tries to be exposed to a certain chance of profit without being too harmed by the interest rate hike procedure that hurts More in the long bonds. Nevertheless, it is a bit strange that such a specific fund manages to accumulate so many investments that make it one of the largest in Israel.
The large funds charge solid to somewhat high management fees. 0.56% is a reasonable rate of management fees for a mutual fund that is mostly bonds, and 0.76% can be considered a bit high. A management fee of 1.25% for a stock fund is not considered particularly high either.
However, as we said, the most obvious point that emerges from the data is that these are not the best funds that the fund industry has to offer. Moore 1090 is not among the 25 best funds in the category of up to 20% shares since the beginning of the year. In terms of 3-year returns, it is in 26th place with a difference of about 10% from the leader. Nevertheless, 2.3 billion shekels found their way precisely to this fund and not to the 25 more successful alternatives, which places it as the largest trust fund in Israel (which is not monetary).
Mor Mania Israel is not among the top 20 in the category since the beginning of the year, even though it is a leader in terms of fund size among equity funds. Looking at three years, it stands only in 50th place, while the Moore investment house itself has 3 better equity funds. Meitav 2080 is in 49th place since the beginning of the year, and in 14th place in a three-year period, but with an insignificant difference from the leader of about 4%.
The large funds in Israel therefore fail to stand out in terms of achievements and yet attract investments in huge volumes compared to competitors. Do the advisors at the banks simply “flow” the customers to the same familiar and convenient funds? Do the funds benefit from another generous investment flow? There may be an expression here for what is known as the “small advantage” – the ability to manage relatively small amounts of money in a better and more profitable way. It is therefore possible that these funds performed well when they were smaller and attracted a lot of investment as a result, but struggle to show the same returns with a much higher volume of assets under management.
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