i.Net performance figures are shown after all fees and expenses, and assume reinvestment of distributions. Performance figures are calculated using net asset values after all fees and expenses, and assume reinvestment of distributions. Index returns shown are in ILS (Israeli Shekel). No allowance has been made for buy/sell spreads. Please refer to the PDS for information regarding risks. Past performance is not a reliable indicator of future performance and may not be repeated, the value of investments can go up and down.
^. Inception 1st January 2018.
* Performance for periods greater than 12 months are annualised. Net performance figures are shown after all fees and expenses, and assume reinvestment of distributions. No allowance has been made for buy/sell spreads. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
1. Inception date 1 January 2018. Performance shown is the continuous performance of both the current and previous strategies.
2. Prior to February 2025 performance has been simulated by Pengana from the monthly gross returns of the Alpha Long Equities Fund denominated in ILS. The simulation was done by: hedging currency exposure of the underlying strategy to the base currency of the stated class using three month forward rates; and, applying the fee structure of the stated class. From February 2025 inclusive, performance is of the Pengana Alpha Israel Fund.
3. Index returns shown are in ILS (Israeli Shekel).
Please note: This fund is only open to Wholesale Investors.
COMMENTARY
Market Review
Israeli equities posted broad gains in May against a backdrop of supportive macro developments and constructive momentum in global risk assets. The TA-125 Index rose 2.7% during the month, bringing its year-to-date return to 20.9% and positioning the Israeli market among the strongest-performing equity benchmarks globally in 2026. Gains were concentrated in technology stocks, with the renewable energy segment also contributing meaningfully, while the banking sector lagged.
Global equity markets extended their rally, with US equities posting strong gains driven by continued momentum in artificial intelligence infrastructure, semiconductors, and digital platforms. Most other developed markets also advanced.
The defining domestic event of the month was the Bank of Israel’s decision on 25 May to cut its benchmark interest rate by 25 basis points to 3.75%, the central bank’s second reduction of 2026. The Monetary Committee cited three factors, namely a strengthening shekel, inflation comfortably within the 1% to 3% target band, and improving prospects for a resolution to the conflict with Iran, where the ceasefire reached in early April remained in place through the month, though tensions have since re-escalated. Notably, despite the rate cut, the shekel strengthened further in the days that followed, as markets interpreted Governor Yaron’s remarks as a signal that the Bank would not intervene aggressively in the foreign exchange market.
Inflation continues to track well within target, supported in large part by the shekel’s appreciation, which materially reduces import costs and dampens the pass-through of global commodity prices. Twelve-month forward inflation expectations, as derived from market pricing, stand at approximately 1.5%, providing the Monetary Committee with meaningful flexibility to continue its easing cycle. Capital Economics expects an additional 25 basis point cut in July.
Portfolio Commentary
The Fund delivered a constructive result in May, broadly in line with the benchmark. Contributions came across technology and renewable energy holdings, partly offset by weakness in the Fund’s banking sector exposure.
Leading the contributors was Energix, an Israeli renewable energy developer, which advanced 32%. Q1 2026 results were solid, with revenue up approximately 14% and EBITDA from the mature portfolio rising approximately 20% on a like-for-like basis. The team views the Strategic Investor Day in July as a key catalyst, with management expected to outline the growth roadmap through 2030, including possible exposure to US data-centre projects.
Payton, an Israeli electronics manufacturer, rose 26%, and Qualitau, the Fund’s largest semiconductor holding, advanced 22%. Both benefited from continued strength across the global semiconductor sector, which extended a powerful run in May as AI-related capital spending drove returns to multi-decade highs. Qualitau’s gains also reflected company-specific execution, with greater management transparency around order visibility restoring investor confidence after the earlier-year setback.
Telsys, an electronics distribution and embedded computing group, gained 10% following record Q1 2026 results. Revenue grew approximately 50% year-over-year, driven by strong demand for Verisity modules and accelerated distribution activity with NVIDIA. Customer advances doubled to approximately US$20 million, supporting forward visibility, and the team views the deepening NVIDIA partnership as a durable competitive advantage.
The main detractor was the Fund’s banking sector exposure, which declined approximately 6% amid sector-specific pressures in the domestic environment.
Two further holdings warrant mention. Nayax, a cashless payment solutions provider, delivered Q1 2026 results ahead of expectations, with revenue up 32% (organic growth of 26%) and payment processing gross margins improving from 36% to 40%. Management reaffirmed full-year guidance, while an April workforce reduction is expected to support operating leverage later in the year.
Fattal Holdings, which operates leading hospitality brands across Europe, reported Q1 2026 results materially affected by two non-recurring items. The conflict with Iran and foreign-exchange headwinds. Excluding these, underlying performance was broadly in line with the prior year. The company secured a €540 million strategic investment partnership with seven institutional partners, expected to close in Q2 2026, and sixteen new hotel openings planned for 2026 provide meaningful upside into the second half.
The team remains constructive on positioning, with continued visibility across core holdings into the second half.