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Mutual funds achieved positive yields for November. The combined weighted index of mutual funds rose 2 percent, leading to a NIS 300 million increase in assets held by the funds. However the public continued to withdraw funds to the tune of NIS 500 million in November and from the start of 2002 the mutuals' yields are negative across the board, ranging from minus 5.1 percent to minus 9.3 percent.

The big hit in November was mutual funds that invest in short-term loans (which are tax-exempt in 2003). These, categorized as taxable funds, will not be charged tax on capital gains due to the nature of the assets in which they invest.

The funds raised about a billion shekels in November, mainly due to public fears of the reach of the tax authorities. The marketing strength of the banks, which encourage many depositors to take out short-term loans, played an important role here too.

Another interesting phenomenon in November was the continued strengthening of the foreign currency component of mutual funds, which reached a high of 20.8 percent of total assets.

The most successful foreign currency mutual funds are the ones that invest in overseas bonds. The local foreign currency funds actually experienced withdrawals in November, totaling NIS 154 million.

For the first time since January 2002 there has been a change in the trend toward funds that invest in stocks, which attracted NIS 64 million in investments. The relative weight of share-oriented funds rose in November from 11.5 percent to 12.5 percent, mainly due to the nice yields recorded by the share indexes (about 10 percent) and also thanks to new investments in share-oriented funds.

Since the beginning of 2002 there has been a sharp drop of 30 percent in the assets of the funds, from NIS 63.3 billion in January to NIS 44.4 billion today. Two reasons for this are large withdrawals, totaling NIS 17 billion, and adjusted negative yields of 2.9 percent. Most of the withdrawals (NIS 14.5 billion) were from shekel-oriented funds, while funds with overseas interests attracted investments of NIS 2.9 billion.