Israel's Sovereign Wealth Fund, known as the Citizens' Fund, had assets worth about $2 billion at the end of 2024. During 2024, the fund earned returns on its investments of 11.5% in nominal US dollar terms and since it was founded annual returns have averaged 11.7%, according to the annual report on the Israel Citizens' Fund published today by the Ministry of Finance.
The Israel Citizens' Fund, is a sovereign wealth fund that manages state revenues from the levies on the profits of Israel's natural resources, and invests them in overseas financial assets. The fund uses the capital accrued from state revenues on the natural resources to strengthen the economy - to promote renewable energies, R&D, to encourage employment in the Negev and for Israel's citizens in the long term.
The fund is also intended to provide an economic safety net for the government during exceptional economic crises, and is also designed to counter the negative aspects of an excessive increase in a country's state revenues from natural reserves, which can harm an economy.
The Israeli Citizens Fund Law was enacted in 2014, and the fund began activities in June 2022 (several years after it was supposed to begin operating), after the accumulated amount from the levy reached NIS 1 billion - the amount set as a condition for the law to enter into force.
In 2022, the fund achieved a return of 1.2%, approximately $10 million. In 2023, the return was 17.5% - approximately $149.5 million, which was an exceptional return.
In 2024, state revenues deposited into the fund, according to the provisions of the Natural Resources Profits Taxation Law, totaled about $417 million. In 2023, the fund transferred roughly $33.6 million to the state budget for the 2023 and 2024 budget years.
2024 was a good year for the Fund's assets
According to the Ministry of Finance report, 2024 was a good year for the fund's assets, partly due to the election of Donald Trump as US President and the increases in stock prices that contributed to the fund's returns in the final months of 2024. In addition, most assets recorded positive returns, led by stocks that showed double-digit returns higher than the average returns of long-term investments. Corporate bonds below investment grade recorded better returns than those of government bonds. The increase in yields on medium- and long-term government bonds resulted in long-term bonds providing a lower return than short-term bonds.
The fund's assets are managed by a dedicated management department at the Bank of Israel, which invests them in overseas assets and foreign currencies with long-term investment aims and in line with the investment policy set by the Fund. At the end of 2023, the Fund's assets were composed of about 60% stocks and 40% bonds. In 2024, it was decided to invest 70% in stocks and 30% in bonds.
The Fund's returns were mainly due to investments in stocks in developed economies, which accounted for almost 90% of the Fund's total investment in stocks, and especially the performance of the "Magnificent Seven" tech stocks in the US. The performance of developed-economy stocks was better than those of emerging-economy stocks.
The report did not specify the uses made of the Fund's money. In the coming years, 3.5% of the value of the Fund's assets will be allocated for social, economic and educational purposes as part of the state budget. In 2025, the annual allocation is NIS 189 million.
Use of the Fund's capital sparked controversy during the recent 2025 budget discussions, when the Committee for Supervision of the Israel Citizens Fund approved allocating NIS 189 million from the Fund as proposed by Minister of Finance Bezalel Smotrich, even though Knesset legal advisor Adv Sagit Afik ruled that this allocation did not comply with the spirit of the law. This was after it became clear that NIS 2 million of the fund's funds would be transferred to the Hesder Yeshiva in Kiryat Shmona.
Published by Globes, Israel business news - en.globes.co.il - on March 31, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.