Managed Investment Portfolio Comparison

We are all aware of the importance of saving, but most of us also understand that accumulating a certain amount of money is only the first step in a complex process called smart saving. The second and much more important step is investing the amount correctly, in a way that will allow you to enjoy it in a few years, and actually increase the initial savings amount. In other words, make money work.

Comparing investment portfolios and choosing an optimal investment channel

When we consider which investment path to take, we have two main options. If we prefer a predefined investment path, we can choose one of the savings paths such as deposits, savings plans, funds and provident funds. However, if we want a personalized investment path with an investment strategy that matches our needs and our outlook, we will turn to the investment portfolio path. Just as we prefer a professional foreman to manage our construction workers, so too for our investments we prefer a professional and experienced investment manager who will know how to adapt our investment path to our needs and abilities: the total initial investment, the investment range, the risk we are willing to take, the parameters we would like to receive, which we will discuss in further guides. And here a main question arises: What is the correct way to compare investment houses and how do you choose an investment house?

Managed investment portfolio

A managed investment portfolio is an ideal solution for people who, on the one hand, are interested in a personalized investment strategy with regard to risk level, expected returns, liquidity of the investment amount, etc., but on the other hand, are not interested in investing a lot of time in capital market research and prefer to rely on experts in this matter. The actual operation of managing an investment portfolio is very simple and is often performed through a bank account, but before that, it is necessary to choose an investment house that will do the work for us, that is, carry out the actions of buying and selling securities. An investment portfolio manager will do this independently in accordance with the power of attorney he receives from you and according to the strategy you determine together. The investment portfolio manager, of course, does not have permission to withdraw money from your account. In return, the investment house charges management fees that are derived from the investment amount and the chosen investment path. The most common types of investment portfolios:

• Israeli securities portfolios – These portfolios contain a varying mix of Israeli stocks. The investment strategy in the various stocks is mainly influenced by the level of risk each investor is willing to take.
• Global securities portfolios – portfolios similar to Israeli securities portfolios, but also include shares of companies outside the country.
• Mutual fund portfolios – portfolios that focus on investing in a specific field of activity or industry.

Basic parameters for comparing investment entities

Usually, when we come to choose an investment house, we focus on comparing returns between investment houses only, which are published from time to time. This is of course an important criterion, but it would be a mistake to state that returns are the only important parameter, and that an investment house that presented the best performance in the last quarter or the last year should be overwhelmingly preferred. And not only because returns are something that constantly changes, and in order to get the full picture, even if only on the subject of returns alone, it is necessary to carry out comprehensive economic research that takes into account many data, but because there are additional parameters that a private investor should take into account. Before starting work with an investment house, and in addition to checking which investment house has the highest returns, make sure that the investment house meets these basic and essential criteria:

• Free and continuous access to your investments. Make sure you can monitor the status of your investments at all times. The law requires the investment house to send quarterly and annual reports, but most investors prefer closer monitoring of their investments and most investment houses allow this through various tools. Check whether the tools the investment house provides are indeed convenient and available to you.
• Direct contact with your portfolio manager for any questions. There is no need to explain why contacting your portfolio manager directly is much better than contacting customer service.
• License from the Securities Authority – An investment house and your private investment portfolio manager must have a license from the Securities Authority.

Bottom line, when you ask yourself how to compare investment houses, pay attention not only to economic parameters, such as returns and management fees, but also to the level of service that the investment house offers to each private investor.

A brief overview of leading investment houses in Israel

Migdal Capital Markets – An investment house specializing in short- to medium-term savings management. The minimum investment amount required to open a portfolio is NIS 300,000, with the total investments managed by the investment house being NIS 32 billion. The company offers a wide range of investment mixes and financial solutions for different types of clients. Altshuler Shaham – one of the largest investment houses in the country, managing almost 140 billion NIS in investments. You can open an investment portfolio starting at 300,000 NIS. The investment house offers a wide range of investment avenues, and has 30 years of experience in the field. The investment house is managed by Gilad Altshuler and Ran Shaham. It is also one of the investment houses that won the Ministry of Finance’s tender to manage default pension funds (i.e. for people who did not choose a pension fund themselves) at extremely low management fees. Yelin Lapidot – an investment house managed by two accountants: Dov Yelin and Yair Lapidot. The entry threshold for this investment house is relatively high and stands at 500,000 NIS – the minimum amount to open a portfolio, and this, according to the investment house, is in order to provide each client with personal and professional service by a capital market expert who will serve as their investment portfolio manager. Excellence – an investment house that is actually part of the “Phoenix” group. The investment house specializes in long-term investments, starting at 300,000 NIS. The investment house advocates an approach of research and analysis carried out in the dedicated department of “Excellence Neshua” which actually serves as a back-up for the investment managers themselves. The company has 25 years of experience in investment management. Psagot – the largest investment house in the country, managing assets totaling almost 190 billion NIS. Approximately 50 years of experience in managing investment portfolios give the company a reputation in the investment portfolio management market, and you can join it with an investment portfolio of 300,000 NIS. The company is managed by Roy Varmos. Today’s “Psagot” investment house is the result of many mergers and today it focuses on managing a wide variety of investment portfolios, mutual funds, ETFs, and more. Meitav Dash – an investment house with 30 years of experience. The minimum investment portfolio is NIS 350,000, and the investment house’s total assets are approximately NIS 100 billion, which include investment portfolios, pension funds, provident funds, and more. The investment house is managed by Ilan Raviv. The investment house has a number of subsidiaries in the fields of risk management, brokerage, management of employee option plans, and even a college for capital market studies. IBI – A long-standing investment house that advocates creativity and innovation and offers unique investment tracks in Israel and abroad. The portfolio manager builds a unique and dedicated investment portfolio for each client, with the minimum portfolio being NIS 350,000. In conclusion, it can be said that there are a variety of investment houses operating in Israel, and most of them present themselves as reliable and professional investment houses that advocate transparency and personalization for each client. On the other hand, an in-depth analysis of the investment house’s performance requires in-depth knowledge of economics and is not at all simple. So how do you choose the best investment house for you? The most recommended first step is a meeting with a broker, that is, a neutral agent who will help you map out the most relevant investment houses for your future investment portfolio, and will provide a brief overview of the advantages and disadvantages of each investment house in relation to your specific needs. This meeting is free of charge and is often very helpful in focusing your search efforts for an optimal investment house.