As the new year really starts to get underway, Israel’s largest mutual fund company, Nesuah Zannex Ltd, is preparing to launch a new, ‘global’ mutual fund in partnership with Invesco. Nesuah Zannex already offers 12 mutual funds (11 of which are listed in Israel), but the partnership with the mutual fund giant will allow them to invest by sector rather than geography. The fund will be divided into six sectors: Hi-tech, healthcare, telecom, finance, resources, and laser, with none making up more than 30%.
The institution is not the only one to have picked up on the changing mood sparked by the forthcoming tax reform in Israel. Ofek Securities and Investments Ltd is teaming up with the Credit Suisse Group, and Meitav Investment Management and Securities Advisers has joined forces with a European partner whose identity is at present undisclosed.
The tax reform, when it is finally passed (it was recommended in May of last year), proposes to lower income tax while instituting a 25% tax on all profits made in the capital market. Now admittedly, this isn’t an especially cheery prospect for the Israelis, but it will in effect, open Israel up. There will be little difference between domestic investing, or investing abroad, so investors will be free to put their funds in foreign markets with potentially higher profit margins, and move away from the Israeli market, which is presently stagnating due to a combination of political uncertainty and lack of knowledge, but should improve when exposed to competition from the world market.
It is hoped that the partnerships will provide some much-needed global market knowledge for the Israeli fund managers; with regard to the company’s union with Invesco, fund manager Shai Zucker observed: ‘If I want to invest abroad, I need the people there who know. I don’t think we could give the same kind of option without analysts worldwide. Israeli analysts can barely handle local information, so we looked for an international group.’
The Nesuah Zannex/Invesco union is only about a week old at this time, but with the infrastructure for dealing with increased globalisation now in place, there is confidence that the joint venture, and others like it, will be a success when the beleaguered tax reform finally limps through…
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