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
Market Review
Israeli equities surged in September, with the TA-125 Index gaining 3.8%, as investors reacted positively to the breakthrough peace framework announced late in the month. The agreement, brokered by the U.S. and key Arab states, marked the most significant diplomatic progress in two years and raised hopes for a sustained end to hostilities. President Trump’s “21-Point Plan,” which includes an immediate ceasefire, hostage release, and regional demilitarisation under international supervision, was viewed as a potential turning point for Middle Eastern stability.
The month began calmly but turned volatile mid-month following Prime Minister Netanyahu’s speech, which briefly unsettled markets amid fears of diplomatic isolation. Sentiment reversed sharply after Netanyahu’s unexpected visit to the White House and the unveiling of the new peace framework, sparking a powerful rally that drove local indices to record or near-record highs by month-end.
Macroeconomic data reflected ongoing resilience in Israel’s economy. The August CPI rose 0.7%, lifting annual inflation to 2.9%, close to the upper bound of the Bank of Israel’s target range. Inflation is expected to ease in September, with forecasts pointing to a modest decline of 0.3%. The central bank kept its policy rate unchanged at 4.5%, signalling that rate cuts could begin later in the year once inflation stabilises.
Economic activity remained firm, supported by higher private consumption and stronger exports. Credit card purchases rose 7.8% quarter-on-quarter, reflecting solid domestic demand, while goods exports rebounded after a weak second quarter. Despite a slightly wider trade deficit, Israel’s risk premium, sovereign spreads, and exchange rate all remained stable, underlining investor confidence in the economy’s underlying strength.
Portfolio Commentary
The Fund delivered a strong return in September, outperforming the broader Israeli market. Gains were driven by positive positioning across technology, energy, and natural resource holdings, supported by renewed optimism following the announcement of a ceasefire and regional peace framework. The investment team managed the sharp swings in sentiment effectively, maintaining conviction in structural growth exposures while selectively rotating into areas offering both resilience and valuation support.
Market breadth improved noticeably as the ceasefire news restored confidence across sectors. Real estate, financial, and infrastructure stocks stabilised after several months of weakness, while domestic sentiment indicators turned sharply higher. The broad-based rebound provided a supportive backdrop for company-specific catalysts across several portfolio holdings.
The strongest contributor was Camtek, which continues to benefit from powerful structural tailwinds in semiconductor manufacturing and AI-related infrastructure investment. The company successfully raised USD 425 million through a zero-coupon convertible bond issue due in 2030, taking advantage of robust market conditions to strengthen its balance sheet and fund expansion initiatives.
Together with Qualitau, another semiconductor equipment manufacturer, these holdings contributed roughly one quarter of the Fund’s monthly return. The team also tactically increased exposure to the global semiconductor sector through option strategies on foreign-listed technology names, reflecting ongoing conviction in the theme and its importance to Israel’s long-term growth outlook.
Energy holdings performed well, led by Isramco, which gained after investor Aaron Frenkel increased his position in Tamar Petroleum, prompting renewed attention on the Tamar gas reservoir. As both companies hold stakes in the same underlying asset, Isramco’s valuation began to close the gap with Tamar’s. Navitas Petroleum was another strong performer after completing one of the largest equity raisings on the Tel Aviv Stock Exchange this year, raising approximately USD 370 million to fund development of the Sea Lion oil project. The placement attracted exceptional institutional demand, with all Alpha-managed funds participating.
With geopolitical risk easing and macroeconomic conditions broadly stable, the portfolio remains focused on companies with resilient earnings, strong balance sheets, and exposure to structural growth themes. A sustainable peace framework could mark the beginning of a new investment cycle for Israeli assets, supporting enduring value creation for investors.