Our Continuing Education Funds in May: Bunker Games and Build on Bursts

Even last month, our study funds did not escape the falls in the markets, with the competition being the one who lost the least money to its colleagues.

How to manage an investment portfolio in days of uncertainty?

By and large, a bit like football: defensive games with a few bursting attacks

Roast Greenberg

16/06/2022

Thursday, 16 June 2022, 08:06 Updated: 08:18

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Investors' disappointment with the lack of moderation Inflation made Israel a leader in the declines in international markets during the month of last May, and continued the trend of losses experienced by members of the study funds.

The average return of the funds was negative and stood at 2.52% - for the fifth month of the year, which led to the accumulation of an average negative return of 5.10% - from the beginning of the year for all 10 major study funds in Israel.

The training fund of the Migdal Insurance Company was the one that managed to protect its peers' losses more than the other funds, and recorded a negative return of 2.1% - last May, which is 1.1% higher than the return recorded by the investment house analyst, who signed the bottom with a negative return of about 3.2%.

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The main reason for the declines: the understanding that the problem is not only in the supply chain, but the supplier in the ability to curb inflation (Photo: ShutterStock)

Tel Aviv is fighting against the decline

The declines in tradable assets in Israel were led by the Tel Aviv 90 Index, which fell by about 7.9% during May this year, and the Tel Aviv 125 Index, which also fell by 5.3%.

Even the Tel Aviv 35 Index, which represents the traded shares of the 35 largest and most stable companies on the Tel Aviv Stock Exchange, fell by 4.2

% during the same period.

The moderate compared to a decrease of about 9.6% that the index absorbed in April this year, along with the S & P500 index that ended the last month with 0%.

Some tradable markets, however, ended May on the positive side.

For example, the German DAX index ended May with an increase of about 2%, and the Chinese Shanghai index showed an increase of about 4.5%.

Performance of study funds (Photo: Walla !, no)

Erez Migdali

, director of the investment division at Migdal Insurance, explained that "the volatility experienced by the tradable markets during the last month of May was mainly due to a correction during the same half of the month due to the expectation of a moderation in inflation.

" By the tradable market in Israel, which is also affected, among other things, by inflation, but it should be remembered that Israel experiences the declines at later stages than the rest of the world markets, and that examining the Israeli market since the beginning of the year shows that we are still not in the same decline curve.

Inflation also continued to sit as a weight on the U.S. markets, where the bulk of the sectors that led the declines were technology, communications, and consumer-dependent companies, such as very specific retailers like Target, specific real estate companies, and more.

The reason is that the disposable income of the average American has been hurt, among other things, by absorbing an increase in housing, fuel and transportation prices.

In the US, there is a shift in inflation from the product sector to the services sector, such as housing, transportation, education, health, etc. In those that

characterize long-term inflation.

"Things will eventually stabilize and get better, now that inflation has reached the issue of housing, the assessment and understanding is that a problem of uncertainty about its solution is beginning to arise."

Erez Migdali, Director of the Investment Division at Migdal Insurance (Photo: Gal Hermoni)

How do you put together a solid portfolio in the face of a volatile market?

Migdali also refers to what is happening in the world capital markets: "Compared to the US and Israel, some European markets did show better results, but not all of Europe succeeded in the same way this month.

For example, the stock market indices in Germany and France were better during May than the stock market in Switzerland, for example.

Value stocks such as energy, insurance and finance companies worked better during May, and tech companies, real estate exposed to rising interest rates, and consumer-facing companies worked less well

. During June, it again experienced sharp declines.Our

counterparts, in the tower, were less hit than fellow fund funds during May following an investment strategy we began with adjustments to interest rate hikes and inflation rises.

This included significant short-term (average life) reductions in government and corporate bonds, beyond holding in companies that are less leveraged and have broader financial strength, alongside changing stock mixes, targeting sectors such as healthcare, and more companies paying dividends. In addition,

for

several years we have been working strategically to integrate alternative (non-marketable) assets in our investment portfolio, and we continued to increase this part of the portfolio in May, when the non-negotiable part constitutes, among other things, inflation protection

. The non-tradable are: energy and digital infrastructures such as data centers and optimistic fiber.

• Of money

• consumption

• Financial decisions

Tags

• Study funds

• The Tel Aviv Stock Exchange

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