The sharp losses on stock markets in May hit mutual funds and exchange traded funds, as investors transferred capital to more conservative investments, with money market funds raising a net NIS 1.8 billion during the month.
Mutual funds raised a net NIS 400 million during May, bringing total assets under management to NIS 151.5 billion, but almost all the money was raised by money market funds and mutual funds that invest in government bonds, while capital was withdrawn from mutual funds that invest in stocks and corporate bonds.
Mutual funds raised a net NIS 6.3 billion in January-May, averaging over NIS 1 billion a month, although the total fell to NIS 400 million in May. After net withdrawals in January-April, money market funds raised a net NIS 1.8 billion in May, including NIS 1.2 billion in new capital, and NIS 600 million was due to change in category by Psagot Investment House Ltd. Psagot's shekel fund, Psagot Makam and up to Six Months, was reclassified as a money market fund - Psagot Makam and Lending - on May 1, following a policy change.
There are several reasons why money managers are changing the policies of their funds, including funds that no longer attract capital, have few remaining assets, or simply to write off a poor history.
The purpose of Psagot's change is not known, but it is clear that it turned a loss-making fund into a profitable one. As a shekel fund, Psagot Makam charged a management fee of 0.1%, and paid a distribution fee of 0.25%, resulting in a loss of 15 agorot on every shekel raised. As a money market fund, the management fee is 0.18% and the distribution fee is 0.125%, resulting in a profit of 5.5 agorot on every shekel raised. Psagot Makam now generates NIS 300,000 a year in revenue.
Mutual funds that invest in government bonds raised capital in May, and they were the only instrument with a positive return - 1.5% - for the month. These funds raised a net NIS 1.1 billion in May, mostly for medium term CPI-linked bonds.
A net NIS 476 million was withdrawn from ETFs in May, after earlier raising a net NIS 1.7 billion. Foreign stock exchanges ETFs also saw net withdrawals, although TASE-based ETFs raised capital.
Mutual funds and ETF management companies had mixed results in May. Five of the big and mid-sized management companies covered by "Globes" had net withdrawals, as did three of the ETF management companies (which account for most of the sector).
Mutual funds of Altshuler Shaham Ltd. grew by 55.4% in January-May, raising a net NIS 500 million per month, mostly by equity and debt funds. The mutual funds raised a net NIS 363 million in May, for a total of NIS 2.3 billion since January.
Mutual funds of Meitav Investment House Ltd. raised a net NIS 496 million, but this includes a net NIS 575 million raised by money market funds, offset by NIS 79 million withdrawn from equity and debt mutual funds. Last week, Meitav and DS Apex Holdings Ltd. (TASE:DSAP) signed a merger agreement, and the merged company will manage NIS 24.7 billion in assets, giving it a 16.3% market share, the second largest in the sector.
Mutual funds of Psagot Investment House Ltd. raised a net NIS 634 million in May. Excluding the reclassified fund, its money market fund raised a net NIS 358 million and its equity and debt mutual funds raised a net NIS 274 million.
Equity and debt mutual funds (which actually resemble ETFs) of Migdal Capital Markets Ltd. raised a net NIS 238 million and its money market funds raised a net NIS 380 million.
The assets of mutual funds of Excellence Investments Ltd. (TASE: EXCE) fell by 3.4% in January-May. A net NIS 800 million was withdrawn from its mutual funds in January-May, and an additional net of NIS 191 million was withdrawn from its money market funds in May.
IBI Investment House Ltd. (TASE:IBI) and DS Apex also saw net withdrawals from their mutual funds. A net NIS 212 million was withdrawn from IBI's funds in May, for a total of NIS 500 million in January-May, which brought the funds' assets under management back to their level in January of NIS 9.8 billion.
Harel ETF Ltd. raised a net NIS 146 million in May, according to the Federation of Israeli Chambers of Commerce's ETF Association. Except for Harel and Meitav, the ETFs of Excellence KSM Ltd., Tachlit Trackers Ltd. and Psagot, all saw net withdrawals in May. A net NIS 554 million was withdrawn from KSM in May, but this was partly offset by net capital raised by its other instruments. KSM was the only ETF management company with net withdrawals in January-May.
Published by Globes [online], Israel business news - www.globes-online.com - on June 5, 2012
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