Don't say, let's say: the increase in interest rates in the US and our training funds
After a single positive month since the beginning of 2022 where our training funds show losses.
The reason: the Governor of the American Bank, whose announcement of the interest rate hike scared away the investors who regained faith in the capital market, hoping that the Fed was able to control inflation
Greenberg roasts
09/22/2022
Thursday, September 22, 2022, 09:29 Updated: 10:06
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Jerome Powell, chairman of the Fed. Those who believed that they had managed to control inflation, got angry - and the interest rate hike drove away the investors who had already returned (Photo: GettyImages, Drew Angerer)
Investors' confidence in the markets, which already seemed to be restored, was shaken again after the American governor announced another interest rate increase as part of his fight against inflation, leading the Israeli education funds to another month of negative returns.
The average returns achieved by the funds tested by Walla!
Money and Meariv businesses for last August was 1.09%, leading them to an average negative return of 5.42% since the beginning of the year.
This is after a month earlier the investors estimated that the central banks managed to control inflation and hoped to reverse the trend in the markets.
This hope also led the Israeli training funds to the warmth of the positive return, which at the time stood at 3.12% on average.
The training fund that made it through August with relatively mild drying up is that of the investment house Analyst, which achieved a negative return of 0.53%, and leads the table of funds tested by Walla!
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Analyst also leads the table in cumulative return since the beginning of the year, which stands at 4.37%.
The reversal of the trend in the markets led Altshuler Shaham's training fund, which led the training table in July by a considerable margin from the rest, to sign the table from the bottom with a gap of about 1% from the first in the table.
While it closed July with a yield of 4.26%, the Altshuler Shaham training fund's yield was 1.58% last August.
The gap between it and the analyst's fund even widens to about 4.3% when considering the last versus the first return in the table since the beginning of the year.
The performance of the training funds in the month of August.
Downloads only (photo: Walla! system, without)
Noam Rokah, Vice President of Investments at the Analyst investment house, told Walla! Money, that "our slightly higher exposure to the Israeli market compared to our competitors helped us do better last August.
The stock market in Israel was less damaged than the global markets, mainly in light of the strong growth in the country, and inflation, which is at a more moderate rate than in the US and Europe. In addition, in Israel there is a lower exposure to technology compared to the American market. In
terms of the local stock exchange, our exposure gave an overweight to bank stocks, and shares such as Infinia and Energics, which rose by 10% and 7%. In
the bond component (bonds), we continued to hold a short MHA (average life span), and this out of fear that the interest rate will be higher than that inherent in the market. As of today , the bonds are priced so that the Bank of Israel will raise the interest rate up to 3.25% in the coming months, while the interest rate in the US will be around 4%.
However, August was a negative month for most investment avenues, with the exception of the local stock market.
For example, the American S&P index fell 4.2%, the Nasdaq index fell 4.6% and the German DAX index ended the month down 3%.
The Tel Aviv 125 index, unlike the global trend, rose by 3%.
The bond market continued the negative trend it has been in since the beginning of the year and recorded declines of 1.9% in the government bond and about 1% in the corporate bond.
While on the goods and transportation side We are already seeing price drops in the last two months, the inflation environment is still high due to its spillover into the service industries as well, and bank governors in the US and Europe continue to try to stop it.
It's a challenging year for investment channels receiving a headwind of high inflation and rising interest rates.
The interest rate hikes will lead to a slowdown in the economies, but not necessarily a deep recession yet.
The moderation of inflation in the future will be a necessary condition for stopping interest rate hikes by the central banks."
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Noam Rokah, VP of Investments at Analyst Investment House (Photo: Public Relations)
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