The financial institutions managing the public’s savings will want to leave the disappointing performances of 2022 behind and go into 2023 with greater confidence as far as certainty in macro-economic conditions is concerned. The uncertainty over central bank interest rates and high rates of inflation, chiefly in Europe and the US, led the pension and advanced training funds to end 2022 with negative returns not seen for many years.
The equities tracks of the advanced training finds ended 2022 with an average negative return of almost 16%, while the more conservative general tracks gave a negative return of 8%. In the pension funds too, the age 50 and under track, to which employees who have not chosen another track for themselves are automatically assigned, ended the year with an average negative return of 5.5%.
2022 was the worst year since 2008, which saw a global financial crisis. The trend on world stock markets was very negative: in the US, the S&P 500 Index fell 19.2%, the Dow Jones Industrial Average fell 8.6%, and the Nasdaq index fell 33%. In Israel, the decline was less steep, with the Tel Aviv 25 Index falling by 9.2% over the year, and the Tel Aviv 125 Index falling 11.8%.
More Investment House recorded the smallest negative return for the general advanced training fund track, at minus 6.13%. It was followed by Migdal, Clal, and Harel with a gap of over 1%. In the equities tracks, Harel recoded the smallest negative return, of minus 14.4%, and was followed by More, Migdal, and Clal. In pension funds, in the age 50 and under track, the only firm with a negative return of less than 4% was Menorah Mivtachim, which overtook Harel thanks to a better performance in December.
On each of these tracks, the worst performer was Altshuler Shaham, mainly because of its high overseas exposure, particularly to the US market. Its advanced training funds recorded negative returns of 19% for the equities track and 11.3% for the general track. Its pension fund ended the year with a negative return of 10%.
Altshuler Shaham Finance CEO Yair Levinstein told "Globes" that the gap between his form and its competitors arose solely from differences in allocations between Israel and the US. "The reason for our large exposure to the US is the many years in which the US economy, not by happenstance, beat every other economy hands down, and it will pull the global economy for the next twenty years as well.
"When is comes to deciding about geographic allocation of deals, we believe that there should be excess exposure to the US. Last year it didn’t work, and that’s the gap that came about between us and the market. When you look at the last six months, in which the US market has outperformed, we are back in the top third, and for July to December we are in third place."
Since we are talking about long-term savings, it’s as well to look at returns over three and five years. Altshuler Shaham is bottom of the pile for these periods too, and for the first time recorded a negative three-year return, of minus 0.4% on the advanced training fund equities track.
More, which entered the provident fund market only in 2018, and therefore does not yet have five-year figures, leads the three-year returns with a return double the average for the general track and almost triple the average for the equities track.
Analyst and Yelin Lapidot, which both had a tough year, allowed their competitors to catch up with them. Although for five-year returns they still lead the market by a considerable margin, several firms have overtaken them for three-year returns.
Published by Globes, Israel business news - en.globes.co.il - on January 16, 2023.
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