Record Year for Mutual Funds in 2013 With NIS 55 Billion Added to Managed Assets

Industry gave investors 7.5% average return; local equity funds averaged 22.66%

Israel’s mutual fund industry added 55 billion shekels to its assets under management in 2013, a stunning 35% increase and a record sum for a single year, as the stock and bond markets rallied and investors sought shelter from low interest rates, according to figures released at the end of the year by Meitav-Dash, an investment house that tracks the industry.

The mutual fund industry in aggregate gave investors an average return of 7.5% last year, with the highest returns of 22.66% generated by mutual funds investing in Tel Aviv Stock Exchange-traded equities. The second highest returns were provided by Israeli mutual funds invested in foreign stocks, which enjoyed average returns of 12.5% for the year. All told, the industry had a record 230 billion shekels under management at the end of December, Meitav-Dash said.

Before 2013, the largest amount of capital raised by Israeli mutual funds in any single year was 21 billion shekels. But the TASE’s benchmark TA-25 index enjoyed a 12% return in 2013 and the TA-100 rose 15%. Even bond prices rose, adding 7% for the year. Around the world, stock markets, including the TASE, hit record highs.

Last year also marked the return of investors to equity mutual funds, which raised 4.7 billion shekels from investors, after six consecutive years of declining investment. Equity mutual funds performed well in 2013, with an average return of 22.7%, a premium of more than seven percentage points over the TA-100. The average return for Israeli mutual funds investing in foreign stocks was 12.5%.

Bond funds raised the most money from investors this past year, with general bond funds raising 23 billion shekels and corporate bond mutual funds raising 9 billion shekels. Money market mutual funds raised 19 billion shekels, with investors viewing them as a better way to invest liquid funds than bank deposits following a reform pushed by the Bank of Israel granting an exemption from paying management fees for investments in government bond and money market funds.

At 9.4 billion shekels, Meitav raised the largest sum from investors among mutual fund managers in 2013, but 6.2 billion shekels of the sum was for money market funds. All told, it had 39.5 billion in assets under management, making it the country’s biggest mutual fund manager. In second place was Yelin Lapidot Investment House, which raised 7.6 billion shekels, almost all of which was invested in traditional mutual funds. Yelin Lapidot’s performance was impressive as only has 13.5 billion shekels under management at the end of the year, making it the seventh largest. In third place was the Psagot Investment House, which raised 6.2 billion shekels from new investors, 4.8 billion of which was invested in traditional mutual funds. Psagot was the second-largest manager, counting assets of 35.5 billion shekels.

Bloomberg