Mutual fund assets grow NIS 3.1b: Investors turn to stock, bond mutual funds. [Globes, Tel Aviv, Israel]

Feb. 25--Israel's mutual fund sector posted another strong month of new investment, mostly by fixed income mutual funds. Total assets managed by mutual funds rose by NIS 3.1 billion during February, with about two thirds of the increase -- NIS 2.2 billion -- due to net deposits. Mutual funds currently have NIS 137.9 billion in assets.

One of the prominent trends in the mutual funds sector of recent months continued in February: withdrawal of money from money market funds in favor of debt and equity mutual funds.

Mutual fund managers are pleased by this development, because debt and equity mutual funds charge much higher management fees than money market funds. The trend is mainly driven by the negligible interest rate, which makes money market funds less attractive, and causes investors and investment managers to seek alternative investment channels, especially in the bond market.

A review of the top four mutual fund management companies shows that Psagot Investment House Ltd. kept its lead in February, with more than NIS 30 billion in assets under management. Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) unit Harel Pia Mutual Funds Ltd. consolidated its second place position for the second consecutive month, with NIS 15.6 billion in assets under management, and Excellence Investments Ltd. (TASE: EXCE) is in third place with NIS 15.1 billion in assets under management.

Migdal Capital Markets Ltd., which raised the most money in 2009, continues to stand out in net capital raised. It currently has NIS 13.9 billion in assets under management, after its mutual funds raised a net NIS 388 million during February.

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