Investment return in 2020: positive return of 4.6% – financial consumerism

Provident funds for investment in the general track generated an average return of 4.6% in 2020. The route is led by Moore with a return of 11.9% in second place The Phoenix andAnalyst With a yield of about 5.6%. In the long run leads Analyst With a return of 18%, followed by Altshuler Shaham with 17.9% and in third place with 17.2% is Yellin Lapidot.

The largest box office in the general track is Altshuler Shaham. The lukewarm return of the investment house in 2020, at a rate of about 5%, may reduce its control over the industry. The provident fund industry for investment grew last year by 23% to about NIS 17.8 billion. This growth was made in 11 months (January-November) and is expected to rise at a sharper rate after the December update, which is characterized by large fundraising of investment provident funds towards the end of the year.

It should be noted that this growth occurs while the parallel savings industry, mutual funds, introduced redemptions of about NIS 30 billion in 2020. It can be argued that the Ministry of Finance’s intention from 2016 to transfer some of the short-term savings (mutual funds) to long-term savings . This, about 5 years by launching provident funds for investment is gaining momentum.

In the coming year, the Finance Committee will discuss the possibility for banks to market investment provident funds. It is still unclear if and when Kofag will invest in the bank’s investment, how it will market. Whether through the bank’s pension advisory systems, which have been reduced in recent years or through investment advisory departments. If the second option is chosen, ie in a similar way To the fund industry.

Meanwhile, in 2020, the Minister of Finance signed regulations that allow the transfer of funds from the provident fund for investment to the pension fund and the possibility of withdrawing these funds in the form of an annuity. Withdrawing funds in this way will provide a significant tax benefit in the form of a capital gains tax exemption that may accumulate to tens of thousands of shekels after decades of savings. Between 2016 and 2020 anyone who wanted to withdraw the funds during the retirement period had to pay tax or wait.

The stock track
In the equity track, at the end of a particularly volatile year, the funds returned 9.35%. This is an excess return compared to the main market indices TA 35 and TA 125. In the last three years, the funds have yielded 25.7%.

The leader is Moore with a return of 11.9%, followed by an analyst with a return of 14.1%. In third place is Migdal with a yield of 8.7%. In the long run of three years an analyst leads with a return of 18%. The investment house took the lead from Altshuler Shaham, which recorded a very lukewarm year in the equity industry with a return of 6.4%, partly due to a weakness in the Alibaba share (NYSE: BABA) which was one of its major investments in the Far East.

Passive or active management?
In recent years the idea that CFOs cannot present an excess return compared to stock indices. This idea has also penetrated the long-term savings industry. Out of this, both Menora and Excellence have launched provident funds for investment in the equity track that include passive management (in the past year, pension funds have also been launched that follow the S&P 500 index from Phoenix and Hellman Aldubi). The results of the funds in one of the most difficult years to manage raise a question mark over the determination of the inability of investment managers to “beat” the index. This is because the two funds with the lowest return are the passive funds of Excellence and Menora, which showed a shortfall of about 3.9% and 3.8% compared to the average.

* Psagot data has not yet reached the system