The returns of the Altshuler Shaham investment house were also not good this year. It is in last place in all categories (training funds, investment benefit, pension and others), and by a significant margin from the others. The reason is that a larger part of their investment portfolio is abroad compared to the other investment houses. This plays in the home’s favor when there are increases and hurts badly when the local stock market is stronger than the world. In 2022 the S&P500 index will fall by 20% and the Nasdaq by more than 30% , and this when the local stock market fell by only 10-12%. In such a reality (and add Altshuler’s investment in China) and you will get an injury to the results compared to others. This is true in pensions, training funds, investment provident funds and more.
Yet, In an interview with Bizportal, Yair Levinstein, CEO of the investment houseis sure that the decision to put a larger share abroad is correct, and he hopes that just as it paid off in the previous years, in which Altshuler was first, so it will be profitable again in the future (probably – when the markets rise again) –
“In previous years, we were good even in the months when the stock markets did not rise. In the last year and a half – two years, our allocation (allocation of the conference portfolio. N.A.) The geography between Israel and the USA was different than that of our competitors, and that is why we were less successful – because the stock market in Israel fell less. I don’t I know if today we have a higher or lower exposure to stocks than others. But what made the difference was Israel versus the US.”
Should you have chosen differently? Put more money in Israel?
Levinstein: “The answer is no. If you ask the five best investment managers in the world to make an allocation between Israel and the US, or in general to choose how much to allocate to Israel and the world – I don’t think anyone there would come close to the level of exposure we have. In the end, we put 25% in Israel and we have to remember that Israel is 0.12% of the global GDP. So both in terms of spreading risks and in terms of Israel’s size in the world, it is wrong to put too much of a part in Israel.
“Our share in Israel this year was 25% because that’s what we believed to be true. Unfortunately, in the last year it didn’t work. But it’s also worth remembering that in the last six months, from July, we’re in the top third of the table. Cumulatively in 6 months, there’s a change in trend and we’re good. So it’s true , if we analyze the last year, it was bad for everyone. And for us it was worse because of the gap between Israel and the USA.”
But you are still below everyone by a large margin, why didn’t the last half year pay off?
Levinstein: “Because the first half of the year was very bad compared to the others. The gaps were very large and despite this the last half of the year narrowed because the American market was better in the second half of the year.”
But the truth must be told – when you look at the returns in the second half, there is practically no difference between the investment houses – all of them end up being in a fairly narrow range of returns. These returns are negative to a small extent. The markets were very volatile – sometimes up and sometimes down and the result is close to zero (slightly on the negative side).
What will happen in the markets this year?
Levinstein: “There is mainly uncertainty that everyone is talking about. Everyone is waiting to see when they will start to control inflation in Israel and the US. It could take a few more months. Until then there can be volatility, but the capital market is looking to the future, when investors realize that the interest rate hikes in the US have done the job – the market will go up. It is true that the Fed stated that it will take time until they lower the interest rate, but when investors realize that it is returning to better areas – I estimate that the market will start make his corrections.”
So when is the right time to enter the market?
Levinstein: “It is impossible to time the market. There is no one who knows how to time exactly when the declines will end or when the market will start to rise. That is why we are trying to work out what the future forecasts are.”
Where is the value of the investment houses then?
Levinstein: “When the interest rate is zero and you divide by zero, any number wins. But today the interest rates are high and it’s already investment management – there are alternatives in bonds, bonds that you can start trying to work on the margins. Now a good manager has to choose avenues they want to be in. Not just stocks.”
“We assume that in a world of high interest rates in the near future, the market can still be volatile. The game is a war on inflation and that needs to be monitored. And within this game, the decisions of how much to increase, decrease, in which avenues to come and invest, etc., must be made.
What about alternative investments?
Levinstein: “We are definitely in this channel as well. In some routes we have close to 10% and in others 20%, which means that it is a significant part of our investments. It is spread over the entire spectrum of alternative investments.”
How do the weak results affect you? You have a loss of income, of course
Levinstein: “There was an outflow of assets as a result of our results. In absolute numbers, these sound like large numbers, but it is worth remembering that when 2 billion shekels go out a month, it is only 1% of the assets. We still manage more than 170 billion shekels today, for 2.5 million clients. Of course, we do not We are happy that money is coming out and we don’t ignore it, but our goal is to prove to the customers who left that we are good and to prove to those who stayed that they made the right choice.
“Our investors of course know and understand the situation. But we also continued in the last quarter and distributed a dividend and you can also see the profit. We run the business with the aim of bringing the best results for our boards and investors.”