from the March 2014 issue

Money Pours into Mutual Funds

High prices on the Tel Aviv Stock Exchange (TASE) are not deterring investors. Mutual funds raised a net NIS 3.9 billion in February 2013, boosting assets under management to over NIS 240 billion.

Debt and equity mutual funds (stock, bond, and tracking funds) raised a net NIS 4.5 billion in February. However, money market funds again saw net withdrawals, amounting to NIS 560 million in February. The withdrawals from money market funds have continued for several months, with the exception of January, in which they raised a net NIS 400 million, because of the negative yield in the markets.

In February, mutual fund investors benefited from price rises in all instruments, averaging 1.3%. The TASE rally, partly because of the 25-basis point cut in the interest rate for March by the Bank of Israel to 0.75%, benefited equities mutual funds, which continued to see strong demand. However, in February, equities mutual funds raised a net NIS 600 million, compared with NIS 900 million in January, even though their average yield was the highest in the industry at 3.7% in February.

It should be noted that, similar to January, the largest amount of net capital raised by mutual funds was by funds specializing in foreign stocks. These funds raised a net NIS 814 million in January-February, compared with the net NIS 516 million raised by funds specializing in Israeli stocks. However, Israeli equities mutual funds had a higher average return in this period than foreign equities mutual funds: 2.65% to 1.1%.

Reprinted from the Israel High-Tech & Investment Report March 2014

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