Exchange traded funds (ETFs) had a good month, raising a 12-month high of capital in October 2009. ETFs' aggregate assets under management rose by NIS 2.1 billion in October to more than NIS 46 billion, including NIS 1.5 billion in net capital raised.
Most of the money raised was by ETFs that track stocks, while ETFs that track foreign currency and bonds suffered from withdrawals. The figures are particularly good in view of the fact that the largest amount raised this year to date was in April, when ETFs raised an aggregate NIS 1 billion. The money raised in October equals the amount raised in the preceding three months.
Investors seeking exposure to stocks apparently prefer doing so via ETFs, which usually do not charge management fees and do not offer active management, rather than via mutual funds. For the sake of comparison, mutual funds raised a net NIS 230 million in October, and less than NIS 2 billion since January. Stock-tracking ETFs have raised nearly NIS 5 billion since the beginning of the year.
There also seems be a clear preference by investors for mutual funds that invest in corporate bonds over ETFs that track the Tel Aviv Stock Exchange's (TASE) Tel-Bond indices. The reason may be that mutual funds offer bond picking.
Despite charging management fees, fixed-income mutual funds have raised NIS 13 billion since the beginning of the year, whereas Tel-Bond tracking ETFs have raised almost nothing, even though they charge lower management fees.
Index Teudot Sal Ltd., jointly owned by DS Apex Holdings Ltd. (TASE:DSAP) and Barak Capital Ltd., remains the ETF leader. It raised NIS 474 million in October, maintaining its momentum of the preceding months. Its assets under management rose by NIS 510 million to exceed NIS 4 billion.
ETFs of Tachlit Investment House Ltd., owned by Israel Discount Bank (TASE: DSCT) and Michael Davis, stood out in October, raising NIS 400 million. Its assets under management rose by NIS 400 million to exceed NIS 11.5 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on November 9, 2009
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