• In the first quarter of 2023, the balance of the public’s financial assets portfolio declined by approximately NIS 15 billion (0.3 percent), to about NIS 4.87 trillion, further to the overall decline in 2022.
  • The decline in the portfolio value in the first quarter was mainly due to a decline in the balance of equities in Israel (8.2 percent) in view of declines in equity indices in Israel, and declines in the balance of cash and deposits (1.5 percent).
  • The balance of the asset portfolio managed by institutional investors increased in the first quarter by approximately NIS 37 billion (1.6 percent), to about NIS 2.33 trillion at the end of the quarter.
  • Institutional investors’ rate of exposure to foreign currency increased by about 2.3 percentage points during the quarter, to about 18.8 percent, while their exposure to foreign assets increased by about 2.6 percentage points, to about 40.3 percent.
  • The value of the portfolio managed by mutual funds in Israel increased by about NIS 4.4 billion (1.2 percent) in the first quarter, to about NIS 372 billion. There were net new investments mainly in shekel money market funds.

 

1. The public’s total assets portfolio

 

In the first quarter of 2023, the balance of the public’s financial assets portfolio declined by approximately NIS 15 billion (0.3 percent), to about NIS 4.87 trillion (Figure 1). The weight of the public’s financial assets portfolio relative to GDP declined by about 6 percentage points, to about 272 percent at the end of the quarter, as a result of a combination of an increase in GDP and a decline in the asset portfolio.

  1. Analysis of the changes in the overall portfolio

 

Over the course of the first quarter, the development of the portfolio was not uniform.  There were declines in the balance of equities in Israel (8.2 percent), the balance of other assets (2 percent), the balance of cash and deposits (1.5 percent), and the balance of tradable corporate bonds (0.2 percent).  At the same time, there were increases in Makam and in investments abroad.

  • The balance of equities in Israel declined by NIS 56 billion (8.2 percent), in view of price declines on equity indices and net redemptions.
  • The balance of cash and deposits declined during the first quarter by about NIS 31 billion (1.5 percent) to about NIS 1.97 trillion.
  • The balance of government bonds (tradable and nontradable) and makam increased during the quarter by about NIS 21 billion (2.4 percent), to about NIS 910 billion. The increase derived from an increase in makam (about NIS 43 billion), while there was a decline in the balance of tradable government bonds due to net redemptions and price declines.

 

The balance of investments abroad increased by approximately NIS 57 billion (8.5 percent) during the quarter, to about NIS 725 billion, constituting about 15 percent of the total asset portfolio. The increase derived from the following two components:

 

  • The balance of equities held abroad increased by about NIS 38 billion (7.8 percent), to about NIS 521 billion. This was mainly the result of price increases that were partly offset by net realizations (estimated at about NIS 14 billion).
  • The balance of tradable (corporate and government) bonds abroad increased by about NIS 19 billion (10.4 percent) during the quarter, to about NIS 204 billion. This increase derived from a combination of net investments totaling NIS 10.4 billion and price increases.

 

As a result of developments during the quarter, there was an increase of about 1.7 percentage points (from 21.7 percent to 23.4 percent) in the share of foreign currency assets, and an increase of about 1.2 percentage points (from 13.7 percent to 14.9 percent) in the share of foreign assets.

 

3. The portfolio managed by institutional investors[1]

 

  • The balance of assets managed by all institutional investors increased in the first quarter by about NIS 37 billion (1.6 percent), to about NIS 2.33 trillion (about 48 percent of the public’s total financial assets portfolio). The increase in the balance encompassed all institutional investors. The increase in the balance of the managed portfolio during the quarter was mainly due to changes in the following investment components: equities abroad—an increase of about NIS 21.2 billion (17.1 percent), mainly due to price increases; government bonds and makam—an increase of about NIS 13.3 billion (1.7 percent); bonds abroad—an increase of about NIS 11.4 billion (16.4 percent), as a result of net purchases and price increases; equities in Israel—a decline of about NIS 17.5 billion (7.9 percent), mainly due to price declines in equity indices; and cash and deposits in Israel—a decline of about NIS 16.4 billion (6.9 percent).

 

  • Exposure of the portfolio managed by institutional investors[2] to foreign assets and to foreign currency

 

In the first quarter of 2023, the rate of institutional investors’ exposure to foreign assets increased by about 2.6 percentage points, to about 40.3 percent of total assets. This was a result of an increase in the balance of exposure to foreign assets (5.8 percent) and a decline in the balance of institutional investors’ total assets (1 percent) in dollar terms.

The increase in the balance of exposure to foreign assets (about $14 billion) derived from an increase in exposure through futures contracts and options on foreign equity indices (about $3.6 billion), an increase in the balance of foreign bonds (about $2.6 billion), an increase in investment funds abroad (about $2.6 billion), and an increase in equities abroad (about $2.5 billion).

 

Exposure to foreign currency—During the first quarter of 2023, and further to the trend since the beginning of 2022, institutional investors made net purchases of foreign currency assets, totaling about $5.1 billion—purchases totaling about $4.1 billion in assets denominated in and linked to foreign currency (mainly in foreign bonds, demand deposits in Israel denominated in foreign exchange, and futures and options), and net purchases of foreign exchange through derivative financial instruments totaling about $1 billion, meaning a decrease in futures transactions for the sale of foreign exchange.

 

During the first quarter, institutional investors’ rate of exposure to foreign exchange (including shekel/forex derivatives) increased by about 2.3 percentage points to about 18.8 percent, due to an increase in the rate of exposure to foreign exchange after hedging and a decline in total investment assets in dollar terms.

4. The portfolio managed by mutual funds

 

The value of the portfolio managed by Israeli mutual funds increased in the first quarter by about NIS 4.4 billion (1.2 percent), to about NIS 372 billion, constituting about 7.6 percent of the public’s total asset portfolio.

 

The increase in the first quarter derived mainly from net investment in the funds totaling about NIS 2 billion. Most of the new investment was in shekel money market funds, totaling NIS 12.2 billion, mostly by households, further to the trend since the beginning of 2022. In contrast, there were net withdrawals of NIS 7.2 billion in funds specializing in general bonds in Israel.

 

 

[1] Excluding mutual funds.

[2] Estimates of members’ exposure (rather than exposure of the institutional investors themselves) to various risks in the portfolio managed for them by the institutional investors (excluding insurance policies with a guaranteed yield, where the risk is taken on by the institutional investors). For additional details on definitions, terms, and explanations, see “Measuring the Exposures of Institutional Investors to Foreign Currency and to Foreign Assets” in the Bank’s Statistical Bulletin for 2016.