Corona effect in funds – In imitation funds raised a huge sum of 8 billion in 2020

• Mutual fund industry assets shrank by NIS 21.7 billion in 2020, representing about 6.2% of their size at the beginning of the year.
• The shrinkage is the result of a total revenue of NIS 24.7 billion.
• Traditional active funds redeemed about NIS 22.8 billion, about 12% of their assets at the beginning of the year.
• The monetary funds redeemed about NIS 6.3 billion, which constitutes about 21% of their assets at the beginning of the year.
• The mutual funds redeemed NIS 3.6 billion.
• The imitation funds that raised a considerable amount of NIS 8 billion.

The year 2020 opened like a real roller coaster. It started as a continuation of the dreamy year of returns of 2019 when stock markets conquered record after record and mutual funds raised a handsome sum of about NIS 1.4 billion in January, but then came February 19th, and the markets began to realize that the Chinese virus, hitherto referred to as a local virus In China alone, it is starting to spread all over the world at a dizzying pace.
The response: Stock markets and corporate bonds collapsed at significant double-digit rates and the fund industry reacted accordingly.

In February and March, the industry redeemed NIS 45.8 billion and the value of its assets fell both due to the frightened outflow of funds, and also due to impairment, from NIS 357 billion at a peak to NIS 258 billion at the end of March, a rate of 28% in just over a month !!!
Towards the end of March a miraculous and very strong recovery began in the markets thanks to a very aggressive policy on the part of central banks and governments around the world that lowered interest rates and flowed money almost without account. This recovery continued almost continuously until the end of the year, and as a result, 2020 ended with sharp price increases in the stock markets. The S & P500 rose sharply by 16.3%, the Nasdaq jumped 43.6%, the German DAX settled for 3.5%, and the Japanese Nikkei rose 16%.
The Tel Aviv 35 and Tel Aviv 125 indices (which are strongly affected by the weight of Tel Aviv 35 shares) recorded negative returns of approximately 10.9% – and approximately 3% – respectively. On the other hand, compared with the Tel Aviv 90 index, 18.1%.
In the domestic corporate bond market, the Tel-Bond 20,40,60 indices concluded a very volatile year with a minimal negative return of about 0.2%, while the general government bond index recorded a slight increase of 1.2% on an annual basis.
The only investment channel hit for the second year in a row was the dollar, which weakened by about 7% against the shekel.

As for mutual funds, in April and May the fund industry returned to raise an estimated NIS 8.6 billion and its assets reached a level of NIS 296.2 billion, still far from its peak. The recovery trend continued, with small bumps, until the end of 2020, when towards the end of the year the markets were supported by optimism of a return to routine thanks to the discovery of the virus vaccine by the pharmaceutical companies Pfizer, Modern and other companies.

The fund industry, therefore, concludes the year with revenue of NIS 24.7 billion, of which NIS 22.8 billion in traditional active funds, NIS 8 billion raised in imitation funds, and revenue of NIS 3.6 billion in mutual funds, and revenue of NIS 6.3 billion in mutual funds. .
Thus, if at the beginning of the year its assets amounted to a total of NIS 352.3 billion, which, as stated, reached a peak of NIS 357 billion, then it closes 2020 with assets worth NIS 330.6 billion, a decrease of about 6.2%.
This decrease was mainly due to the outflow of money from them in a larger amount that was partially offset against the increase in the value of the assets held by the funds. The active industry decreased by 13.4%. Within the passive industry, there was a significant difference between the imitation funds that grew in their assets at a rate of about 24.7% and the mutual funds that decreased by about 3.0%.

The active industry

The active industry in its two parts, the traditional funds and the monetary funds, suffered a massive outflow of funds and together redeemed NIS 29.1 billion.

In February-March 2020, the traditional funds redeemed a total amount of NIS 32.1 billion. Although they recovered and returned to raise from April to the end of the year (except for the months of June, July and September), this did not return the sums they had left.
The mutual fund industry recorded strong redemptions this year, which constitutes about 21% of their assets at the beginning of the year, amounting to about NIS 6.3 billion. This amount includes the outflow of funds from both the shekel monetary funds (close to two-thirds of the amount) and from the dollar monetary funds (close to one-third). It should be noted that the dollar funds suffered a negative return of about 6.4%, and more than half of the shekel funds also achieved a negative return.

The most redeemed category in 2020, of course, was the category of general bond funds, which was the most fundraising category in 2019. It redeemed a sum of about NIS 9.18 billion in 2020. This is despite the fact that in the last quarter of the year they raised more than 4 NIS billion. In March alone, the category redeemed more than NIS 15 billion. Thus, in annual summary, despite the good months that followed, it remained in deep negative territory.

State bond funds, Which also recorded handsome recruitments in 2019, finishing 2020 as the second most redeemed category.

In fact, apart from the second quarter of the year, which brightened their faces (raising NIS 910 million), in all other quarters they redeemed under the leadership of the worst March of all. In annual summary, state bond funds redeemed about NIS 6.17 billion.
Corporate bond funds are ending a bad year for them with redemptions estimated at NIS 4.3 billion, a very high revenue relative to the recovery recorded by the Tel Bond and bond indices as of April, also thanks to the Bank of Israel’s windfall. In contrast, the large mass of fundraising in this category flowed to the passive funds led by the imitation funds which track the bonds of the companies.

The shekel funds They also recorded an outflow of funds in the amount of NIS 1.1 billion, with most of the redemptions recorded, as usual, in March.

The year 2020 was characterized by very sharp price increases in most of the world stock indices.
Equity funds Activity recorded a very volatile year, with the sharp rises in markets being reflected in raisings only in the last quarter of the year. But in an annual summary, despite the sharp price increases in the stock indices, the equity funds (Israel + abroad + flexible funds) end a dismal year with a revenue of about NIS 2.6 billion.

This figure “hides” the difference between funds that specialize in shares abroad, which raised about NIS 1.13 billion, and funds that specialize in shares in Israel, which cost about NIS 2.5 billion, and the flexibility that cost about NIS 1.23 billion. This is another expression of the weakness of the Israeli stock market. 2020 vs. overseas stock markets.
The group of foreign bond funds was the only bright spot when they managed to raise a sum of about NIS 350 million, despite the weakening of the dollar against the shekel.

The passive industry

At the passive industry level and in the cut of investment categories, the funds that specialize in equities, which is also the largest category in this industry, ended 2020 in redemptions, estimated at NIS 590 million, with the imitation funds actually recording large fundraisers of NIS 5.16 billion, while funds The basket ended the year with significant revenues of about NIS 5.75 billion. Within this category, in the cross-section of the investment target, there was a huge gap between funds that specialize in shares in Israel, which raised NIS 2.41 billion, and funds that specialize in shares abroad, which recorded large redemptions of NIS 3 billion. This is the opposite trend to those in active funds.

At the passive industry level, the corporate bond category was the most prominent for the second year in a row after being strongly affected by the jump in corporate bond indices since April, and benefiting from the Bank of Israel’s spirit of support in acquiring corporate bonds. A considerable raising of about NIS 5.9 billion, a trend opposite to that recorded in the active funds.

State bond fundsAlthough they enjoyed price increases of 1.2% in the government bond index, they concluded 2020 with redemptions estimated at NIS 145 million.

Finally, the group of general bond funds, which is very small in the passive industry (in the active industry is the largest category) recorded redemptions of about NIS 775 million, with investors clearly preferring to invest in this category in active funds.

As of December 31, 20, Thursday, the volume of assets of the fund industry stands at NIS 330.6 billion. This figure is divided as follows:
Active industry: NIS 189.1 billion, of which NIS 166.5 billion in traditional funds, and NIS 22.6 billion in monetary funds.
Passive industry: NIS 141.5 billion, of which NIS 90.5 billion in mutual funds, and NIS 51.0 billion in imitation funds.

Including financial. The numbers in parentheses represent the rate of change in assets in 2019 and 2020 compared to the previous year
Some of the changes in total assets are, of course, due to an increase in value.

Summary of the month of December 2020

The traditional active funds raised about NIS 1.83 billion, the passive funds raised about NIS 3.145 billion (the imitators raised about NIS 1.79 billion and the mutual funds raised about NIS 1.355 billion). The mutual funds redeemed about NIS 1.18 billion, and in total the mutual fund industry raised about NIS 3.8 billion.

The active industry in the cross-section of policy:

• Equity-managed funds (Including flexibility): Ending December with a high fundraising of about NIS 0.7 billion. General bond-managed funds maintain the top spot in the fundraising active fund table for the third month in a row, with a raising of approximately NIS 1.76 billion.
• State bond funds Continuing the negative momentum this month as well, and even increasing the redemption rate to an estimated NIS 380 million.
• Corporate bond funds Sixth consecutive monthly rations, a sum of about NIS 130 million.