The international investment promise fades as Israeli savers pull billions from BlackRock, Fidelity and State Street tracks
Phoenix, Harel and Clal once attracted nearly $1.4 billion into savings policies managed by BlackRock, Fidelity and State Street. Today, less than $400 million remains as weaker returns, a stronger shekel and high fees drive withdrawals.
The collaboration between Israeli insurance companies and some of the world’s largest asset managers appeared to hold enormous promise two years ago: savers would gain access to investment management by global giants such as BlackRock, Fidelity and State Street, while insurance companies would benefit from premium products that could justify higher management fees.
However, a combination of a weakening dollar, disappointing returns and the strong performance of the Israeli capital market has reversed the trend. A Calcalist investigation shows that Phoenix, Harel Insurance and Clal Insurance now manage less than NIS 1.2 billion ($400 million) in savings policies whose investments are managed by the three global investment giants, compared with a peak of nearly NIS 4 billion ($1.33B) .
The decline occurred mainly over the past 12 months, during which savers withdrew approximately NIS 1.4 billion from the various savings policy tracks. The redemptions came primarily from the general investment tracks, where most of the public’s money is concentrated, after their performance lagged significantly behind local investment alternatives.
The savings policy category currently manages approximately NIS 130 billion, compared with about NIS 70 billion in investment provident funds. Both products serve as short- and medium-term savings vehicles, but there are significant differences between them.
Savings policies are marketed exclusively by insurance companies, primarily through insurance agents who receive commissions for each sale. As a result, their management fees are generally higher than those charged by investment provident funds, and in many cases the net return for savers is lower.
According to industry estimates, approximately 40% of first-year management fees are transferred to insurance agents, along with one-time compensation payments that can reach up to NIS 10,000 for transferring a client.
The collaborations with foreign asset managers are also reflected in higher fees. In Phoenix’s BlackRock-managed policies, annual management fees ranged between 1.35% and 1.55%, compared with approximately 0.8%-1% in standard savings policies.
Despite the higher costs, the initial success of Phoenix, which was the first to launch such a partnership in 2022, prompted competitors to seek their own global partners.
Harel Insurance signed a collaboration with Fidelity, one of the world’s largest asset managers, and launched two investment tracks in September 2024: general and equity. Two months later, Clal Insurance launched three tracks in cooperation with State Street: general, equity and bonds.
But the momentum quickly changed.
Over the past 12 months, the general tracks managed through these partnerships delivered relatively weak returns. Fidelity’s general track within Harel’s savings policy recorded a negative shekel return of 4.7% between June 2025 and June 2026. This figure is before management fees, meaning the actual loss to savers after fees was close to 6%.
BlackRock’s general track through Phoenix delivered a return of only 0.7% during the same period, while State Street’s general track through Clal generated a return of 0.6%.
By comparison, Israeli training funds in the general track delivered an average return of approximately 14% during the same period, highlighting for savers how significantly the international tracks lagged behind the local market.
One of the main reasons was the weakening dollar. The tracks managed by foreign asset managers are almost entirely exposed to overseas investments, and therefore are also affected by currency fluctuations. Over the past 12 months, the dollar weakened by 8.4% against the shekel, significantly reducing investors’ shekel-denominated returns.
Over a longer period, the gaps are even more pronounced. Since its launch in January 2022, Phoenix’s BlackRock-managed general track generated a cumulative return of 33%. By contrast, Harel’s Fidelity-managed track recorded a negative return of 10.9% since its launch in September 2024, while Clal’s State Street-managed track lost 4% since its launch.
For comparison, the S&P 500 index generated a shekel return of nearly 14% over the same period. However, the S&P 500 is not the official benchmark for these tracks because they are not purely equity investments. Each track has its own benchmark, usually combining stock and bond indices, but those benchmarks are not publicly disclosed and are provided only to policyholders.
The cooperation between Israeli insurers and foreign asset managers began with Phoenix, which remains the largest player in the category.
In January 2022, Phoenix launched three savings tracks managed by BlackRock, the world’s largest asset manager, which manages more than $15 trillion in assets. The company’s medium- and long-term savings division, headed by Or Harush, sought to provide savers with broader exposure to global markets and launched three tracks: equities, general and credit, and bonds. All investments were made outside Israel.
In retrospect, the timing of the launch was particularly favorable.
The year 2023 was characterized by an unusual gap between the performance of the Israeli market and Wall Street. While the Tel Aviv-125 index rose only about 4%, the S&P 500 surged approximately 43%.
The sharp rise in US markets came amid the artificial intelligence boom following the launch of ChatGPT and expectations that the Federal Reserve was nearing the end of its interest rate increases. In Israel, meanwhile, the market was hit by the judicial overhaul crisis and later by the outbreak of the Swords of Iron.
The performance gap pushed many Israeli investors to increase their exposure to global markets, and Phoenix’s BlackRock tracks provided an accessible solution.
Assets under management grew rapidly. Less than two years after launch, the three tracks together managed approximately NIS 3.7 billion.
The general track was the largest, managing NIS 2.6 billion in September 2024. The equity track managed more than NIS 900 million, while the credit and bond track remained relatively small, failing to cross NIS 200 million.
But since then, the picture has changed dramatically.
Over the past two years, the Israeli capital market has significantly outperformed many global markets, partly due to improved investor sentiment following security developments and military achievements.
The Tel Aviv-125 index has surged 104% over the past two years, while the S&P 500 has gained 38% in dollar terms during the same period.
The strong performance of Israeli equities reduced investors’ appetite for overseas-focused tracks. At the same time, the weakening dollar and weaker returns accelerated withdrawals.
The result was that much of the momentum Phoenix built in the early years disappeared. Harel and Clal, which launched their products only in September 2024, entered the market after the peak of investor enthusiasm had already passed. Both managed to attract only tens of millions of shekels and failed to build meaningful asset volumes.
Clal Insurance and Finance said:
“Clal has demonstrated leading performance over the past year across most of the investment tracks it manages, including savings policies, training funds and pension funds, as reflected in published return data. Regarding the collaboration with State Street, it is important to clarify that Clal does not generate excess profits from managing this track compared with other investment tracks, and that the track reflects investment management services provided by one of the world’s largest and leading asset managers.
It is also important to emphasize that recently the Israeli capital market has significantly outperformed many global markets. Since the launch of the track until today, the dollar has weakened by approximately 20% against the shekel. Therefore, examining returns solely in shekel terms does not fully reflect investment performance.
It is incorrect to evaluate long-term savings products over a short period. Diversifying investment portfolios across different products and managers remains valuable, particularly when working with leading global investment managers.”
