Leumi’s S&P 500-linked deposit challenges mutual funds

After a series of limited experiences, the Bank Leumi launched a propaganda campaign for a new product that offers customers a liquid deposit based on the performance of the S&P 500. This step can lead to a fight between joint investment fund managers and banks, which has now been refrained from entering an investment channel that is popular with the Israelis and grows quickly.

Last year, some banks, including leumi, offered a two -year regulatory deposit based on the index, as Savers was unable to lose the deposited amount, but they also did not receive the full return on the index. With the new deposit, in contrast to that, Leumi offers the ability to withdraw money daily and fully exposure to the index.

From the tax point of view, the deposit is the same investment boxes. Tax will be imposed by 25 % on the real gain when withdrawing it, instead of 15 % on the nominal gain as in the case of regular banking deposit. The new product is available to the bank’s customers who are entitled to obtain investment advice (i.e. customers who have a securities account of more than 100,000 NIS). The minimum amount for investment is $ 5,000.

The deposit is a deposit submitted by the US dollar, which guarantees a similar return for the return on the S&P 500. In contrast to the state of investment funds, because it is a deposit, the bank will not receive commissions or administrative fees, which generally reduces the return. Consequently, customers will win, or lose, to perform the entire index, but they will also be 100 % volatile in the Shekel-Dollar exchange rate. Last year, Israeli investors in the funds who follow the S&P 500 and in other tools that are fully exposed to currency exchange rates witnessed that their returns are eroded due to the Shekel estimate.

Joint investment funds are concerned with the possibility of income losing management fees on one of the most popular investment products in Israel in recent years. According to the figures of the Securities Authority in Israel, the money that tracks the total S&P 500 total 78 billion NIS, which represents about a quarter of the negative investment industry in Israel (traded investment funds and tracking funds). Three years ago, this money managed only 11.5 billion NIS.

Joint investment fund managers claim that the deposit structure turns it into a “joint box in camouflage”. In a message to the Israel Securities Authority, the Association of Joint Investment Directors Association states that “this step mainly harms competition between the various products of the money market in Israel, and that it is customary to be harmful to investors because they” do not enjoy the protection that investors enjoy in mutual funds through the various rules that apply to fun. “

The background of the requests of the fund managers are the restrictions that the law enacted two decades ago on the recommendations of the Bakhaar Committee, which prevents banks from managing investment funds. Move for my current day that does not exceed the lines that the law draws. The issue is now on the Israel Securities Authority and the Israeli Banking Supervision Department, which will have to decide whether the new Leumi product is an organized deposit, which banks are allowed to present, or whether it exceeds the restrictions designed to create competition in the market.

If the organizers decide not to interfere, it can be assumed that other banks will follow the example of leumi, as the product reserves the possibility of great gains. The fact that banks are not subject to restrictions imposed on fund managers, will enable them to invest only a small part of the amounts deposited in the contract on the S&P 500, while most of the money will be deposited with foreign fund managers or investing in fixed tools (bonds, short -term loans, as is the case in the modified case in the usual obligations. However, the latter is obligated to pass the gains from investing in investing in investing in investing in investing in investing in investing in investing in investing in investing in investing in investing in investing in investing in investing in investing These other tools to savers, while banks will keep these gains for themselves. There will also be additional revenues from currency transfers that banks will make for depositors, because deposit in dollars.

The Securities Authority rejected Israel.

It was published by Globes, Israel Business News – En.globles.co.il – on September 11, 2025.

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