Phoenix Financial Ltd. engages in the provision of insurance products. It operates through the following business segments: Life Insurance and Savings, Health Insurance, Property and Casualty Insurance, Pension and Provident, Financial Services, Insurance Agencies, and Credit. The Life Insurance and Savings segment includes life insurance products and related coverage, and management of pension and retirement. The Health Insurance segment offers nursing insurance, medical reimbursement insurance, surgeries and transplants, dental insurance, travel insurance, and foreign workers insurance. The Property and Casualty Insurance segment is composed of motor insurance, motor property, other liabilities, and property and other subsegments. The Pension and Provident segment deals with the management of pension funds and provident funds through The Phoenix Pension and Provident. The Financial Services segment is composed of investment management activities, including mutual funds, ETFs, brokerage services, underwriting services, market making in various securities and other services. The Insurance Agencies segment represents the activities of pension arrangement agencies and other insurance agencies in the group. The Credit segment refers to financing against postdated checks, clearing, and management of credit vouchers services, financing against real estate properties, loans and credit, equipment financing and supplier financing. The company was founded by David Hachmi in 1949 and is headquartered in Givatayim, Israel.
COMMENTARY
Israeli equities fell in March, mirroring the decline across global share markets. Concerns over a US-led tariff war under the Trump administration weighed heavily on sentiment, with local markets retreating after a strong February.
Despite short-term weakness, Israel’s economic fundamentals remain sound. Exports are well diversified, with 28% going to the US, 35% to Europe, and 20% to Asia over 2024. High-technology and defence products dominate export flows and are expected to remain resilient. Expectations are growing that the proposed 17% tariff on Israeli goods entering the US will be reversed, alongside Israel lifting its own tariffs on most US imports.
March CPI is forecast to rise 0.45% month-on-month, or 3.3% year-on-year. While the shekel’s depreciation and rising wages are adding inflationary pressure, falling oil prices are expected to ease cost pressures. Markets still anticipate that the Bank of Israel will hold rates steady at 4.5% in the near term, with cuts expected between August and October. Forward guidance implies a 3.75% rate by early 2026.
Domestic consumption remains robust. Credit card purchases rose 3.4% in March, with spending levels in the first two months of the year tracking 1.4% higher than the Q4 average.
Investor confidence in the technology sector also remained strong. Startups raised US$1 billion during March, bringing Q1 fundraising to US$2.25 billion, up 24% year-on-year. This reinforces Israel’s position as a leading innovation hub, even in a volatile global environment.
Portfolio Commentary
The Fund’s performance in March was impacted by broad-based declines across most sectors. Financials were the main exception, with banks and insurance companies rising between 2% and 4% and contributing positively to returns.
Technology was the largest detractor. Shares in Qualitau, which develops semiconductor testing equipment, fell 20% despite the company reporting strong revenue and profitability growth. Its order pipeline expanded to US$51 million, supported by rising global demand as chip complexity increases, and new product development may also open additional market opportunities. The stock remains attractively valued following the recent pullback.
Global-E Online, a leading cross-border e-commerce platform, declined 16% during the month. The company enables international online retailers to localise their checkout experience across markets, handling pricing, tax, shipping, and returns. While there was no material news during March, the stock came under pressure alongside the broader technology sector.
Payton Planar Magnetics, a producer of high-efficiency power conversion components, reported a slight decline in quarterly sales but maintained strong profit margins. The company’s global manufacturing footprint across Israel, China, the Philippines, and the US provides operational flexibility. Payton remains well positioned to benefit from a recovery in component demand or through strategic reinvestment of its cash reserves.
Real estate holding Argo Properties delivered a solid quarterly result. Net profit exceeded €30 million, driven by asset revaluations and ongoing rental growth. Its residential portfolio has expanded from 1,700 to 4,500 units in the past three years. With a price-to-earnings multiple of 1.25, the company remains a high-conviction position in the Fund.