Israeli Provident Funds Post Mixed September Returns as Shekel Dips
Israeli provident funds recorded mixed returns in September, as general tracks slipped 0.1% while S&P 500 tracks gained 2% due to shekel depreciation against the dollar.
Mixed Performance in Provident Funds Amid Market Volatility
September marked a mixed period for Israeli savers, with provident funds (kupot gemel) reflecting diverging trends across asset classes. While the general track posted a negative average yield of 0.1%, equity tracks and S&P 500 tracking funds delivered positive average returns of 0.2% and 2%, respectively, buoyed largely by currency fluctuations.
According to Avi Berkowitz, Deputy Chief Investment Officer at Meitav Provident and Pension Funds, the general track saw returns fluctuate between a positive 0.2% and a negative 0.4% during September. Berkowitz attributed the negative performance to declines across most global equity markets, alongside drops in Israeli government and corporate bonds. However, the shekel depreciated by 2.5% against the US dollar, generating an offset of approximately 0.5% in returns.
"The shekel's depreciation against the dollar played a critical role in cushioning local portfolios, particularly for foreign-exposed tracks," noted financial analysts monitoring the monthly shifts.
S&P 500 Tracks Outperform Despite US Dips
In contrast, funds tracking the S&P 500 index posted returns ranging between 1.9% and 2.1%. This positive outcome materialized even though the US benchmark index itself dipped by 0.5% during the month, entirely counterbalanced by the 2.5% strengthening of the US currency against the Israeli shekel.
Local and international stock exchanges displayed similarly fractured results throughout the month. In Israel, the Tel Aviv 35 Index rose by 1.6% and the Tel Aviv 125 Index edged up by 0.5%, whereas the Tel Aviv 90 Index declined by 2.7%. Meanwhile, US markets saw the Dow Jones Industrial Average drop by 4.3% and the S&P 500 ease by 0.5%, while the tech-heavy Nasdaq Composite gained 1.9%.
Year-to-Date Gains Remain Robust
Despite September's choppy performance, year-to-date figures remain strongly in positive territory across all major tracks. The standard equity track leads the annual performance table with an impressive return of 11.6%, closely followed by the S&P 500 tracking track with 7.8%. The conservative general track also delivered a respectable 6.8% gain for savers since the beginning of the year.
These annual figures are underpinned by strong performances in domestic equities, where the Tel Aviv 35 surged 15.8% and the Tel Aviv 125 climbed 11.2%. American indices displayed comparable vigor over the same timeframe, with the Dow Jones advancing 5.9%, the S&P 500 gaining 11.8%, and the Nasdaq soaring 15.6%.
