Independent trading, economies of scale and a trillion shekels: how investment houses became profit machines

Under the cover of the rally in the capital market, investment houses in Israel have become a well-oiled cash machine in recent years, alongside banks and insurance companies. At the same time, their shares have completed a jump of hundreds of percent. The tremendous growth of their profits can be explained in several different ways, all of which ultimately connect to "operating leverage" or, in simple words, how every shekel added to the volume of assets under management is translated (through the management fees they charge) into the revenue line and from there to profit.

The financial reports published by five leading investment houses show how every shekel that the saving public pours into pension and training funds (as well as investment provident funds or savings for every child), rolls almost directly to the bottom line. The net profit margin of the investment houses relative to their revenues reached almost 18% in the first half of 2026, compared to less than 16% in the first half of last year.

The reason for this is that in terms of the need for office space, analysts and investment managers, or customer service employees, retention or expenses on advertising and marketing, there is no big difference between managing 50 billion shekels and 150 or 250 billion shekels. Therefore, the companies' costs grow much less than the growth in revenues, and therefore the growth in revenues "drops" straight to the profit line.

The large investment houses currently manage more than 1.2 trillion shekels (including Yelin Lapidot, whose reports have not yet been published), with the volume of assets under their management growing in the last year (up to June 2026) by 18%. Part of the growth is attributed to the automatic deposits of savers and part is thanks to the continued jump in the local stock market (TA-125 rose by more than 30%). The "magic" is revealed when looking at revenue growth versus the rise in investment house profits. The revenues recorded by the five investment houses in the half-year jumped by a rate of 28% to a sum of 3.6 billion shekels. Their net profit, on the other hand, jumped by 52% to a sum of 651 million shekels.

One giant investment house — and all the rest

And yet, investment houses are not all the same. Investors in the capital market give Meitav, the largest investment house in Israel, a value of 9.5 billion shekels, and IBI, which is behind it, a value of almost 6 billion shekels. Next in line, Mor Investments, is traded at a value of almost 3 billion shekels, Analyst with 1.7 billion shekels and Altshuler only at 1.3 billion shekels. Atrao Capital Markets, a public company that holds half of Yelin Lapidot's shares, is traded at a value of 900 million shekels, meaning a value of 1.8 billion shekels for the investment house.

The reason for the large pricing gaps lies in the volumes of money managed and the different activities of the investment houses. For example, while Meitav alone manages 463 billion shekels, the next one, Mor, manages 214 billion shekels. The others manage 125–160 billion shekels each.

Independent trading has become a profit machine

Beyond that, Meitav and IBI have also managed to develop significant activity in the field of independent trading for young retail investors who are flocking to the capital market (Altshuler Shaham entered the field recently but not as part of the public company).

In the reports of Meitav and IBI, one can see how much this activity has become a profit machine. In IBI, for example, revenues from trading, custody and execution services jumped in the half-year by 46% to a sum of 260 million shekels and the profit in this sector flew by 117% to a sum of 104 million shekels. During the quarter, about 7,120 clients joined the activity, which counts about 90 thousand clients. IBI notes that the company has set itself the goal of reaching 150 thousand independent trading clients by the end of the second quarter of 2028, growing by 30 thousand clients per year.

At Meitav Trade, revenues from trade activity rose by 20% in the half-year to a sum of 157 million shekels. The profit actually rose less, by 15%, to a sum of 38 million shekels. In the investor call, Ilan Raviv, CEO of the investment house, explained that trading in the second quarter of the year was weaker due to the Passover holiday and the drop in the dollar. According to him, it was a matter of "seasonality". "I suggest examining the trade activity... over a series of quarters". Looking more broadly, he estimates that "trade is a business that can be predicted quite well going forward, over several quarters, and certainly over several years".

The biggest jump in net profit was recorded by the investment house IBI, which presented a jump of about 135% in net profit to 159 million shekels in the half-year summary. Behind the sharp jump is the jump in the activity of IBI Capital, within which the group provides option management services, with an emphasis on the high-tech sector. In the first half, the activity, which became the largest in IBI, presented a jump of more than 4.5 times in profit.

In the investor call after the reports, Dave Lubetzky, CEO of the investment house, explained the growth in activity. According to him, "this reflects a very significant increase in our market share, both in new deals, but also in the transition of large clients from competitors to us. We are very optimistic about our ability to generate such a pipeline of clients".

The largest profit among the investment houses in the half-year was recorded by Meitav (274 million shekels, an increase of 47%). Next is Mor, which presented a growth of 25% in the bottom line to a profit of 8 million shekels. On the other hand, Altshuler Shaham presented a decrease in profits (of 8%) to 50.8 million shekels. Mainly due to the decrease it presented, as mentioned, in revenues, due to the abandonment of clients.