Summary:
Institutional investors' share of the public's asset portfolio amounted to 36.7 percent at the end of 2003 compared to 35 percent last year. The balance of institutional investors' assets increased this year and, in December, amounted to approximately NIS 508 billion compared to NIS 433 billion last year. The main increase was evident in mutual funds and to a lesser extent in profit-sharing life-insurance schemes ג€“ an increase that was partially offset by the decline in the proportion of established pension funds and guaranteed-yield life-insurance schemes.
The trend for the withdrawal of money from provident funds remained unchanged during the year despite the relatively high yield in the fixed income and equity markets with the public increasing its deposits mainly in mutual funds specializing in unindexed assets, especially in Treasury bills. The high positive accrual in these funds proved worthwhile, inter alia, as the revenue from investments in short-term loans was tax-exempt in 2003.
During 2003, institutional investors directed their investments into unindexed and share holdings, a trend that characterized the public's financial asset portfolio in general. This change is attributed, inter alia, to the adjustment of financial asset holdings to the expected decline in inflation, reduced interest in the markets and the increase in share prices.
Towards the end of the year a reform in the pensions sector was put into operation. Within the context of the reform, the government reduced the issue of earmarked bonds for the pension funds. The greater part of the money that was invested in these funds will be transferred to the equity market.