Tel Aviv Shares Earned 7.4% Annual Return Over 15 Years

Result impressive on light of the 48% decline in share prices during the height of the global financial crisis.

Bloomberg

Shares traded on the Tel Aviv Stock Exchange generated an annual return after inflation of 7.4% in the 15 years through the end of 2013, with heavy capitalization shares outperforming their medium-cap peers, the TASE reported this week.

Shares in the TA-25 index of the market's biggest companies by market valuation had an average annual return of 8.1%, while those in the TA-75 index of medium cap stocks yielded just 5.5%, a study by the TASE research department found.

But the small cap stocks that comprise the rest of the bourse’s listings did the best of all, earning a 12% annual return in the 15 years.

Government and corporate bonds, as reflected in the TASE’s General Bond Index, posted an average return of 4.3%. The TASE found that it didn’t matter what kind of bonds were examined — government versus corporate, inflation-linked versus unlinked — all yields returned between 4.5% and 5% during the 15 years.

The one exception was foreign-currency-linked bonds, which had a slim return of just 1.1% during the period. Moreover, in many periods, the returns for the forex bonds were negative.

Shares performed best in the final five years of the period, with an annual return averaging 11% overall and 23.6% for small caps, the bourse said. That is because shares plunged 48% during the height of the global financial crisis, a big black spot in an otherwise era of gains for the market.