Although popular in the US, index funds in Israel are still new and not popular or known to the public. It is very sad to see that because of the lack of financial education in Israel, customers continue to pay inflated commisions to funds with sub-par returns.
For those of you who do not know, Index funds in a nutshell are funds that mimic the performance of some index in the stock market. For example, there can be a fund that mimics the performance of the S&P500. This means that if the S&P500 is up 2%, so is the the fund.
At the past, before funds like those existed, you had to buy the whole index. This means that you would have to buy all the companies that are in the S&P500, which is not that practical for the public. And not only that, you’d have to adjust your investment if some companies join or leave the S&P500.
Although it may seem pretty boring and unsuccesful to mimic the index, surprsingly, it turns out that in theory, this is the best thing you can do and in the long run the most succesful strategy. This deserves a more thorough treatment though and in the next post I’ll explain why this strategy in theory is succesful.
In short, all this is not known to the general public. I am not sure who is supposed to teach it though.
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Index funds (kesem) are known and successful in Israel.
nanometre biwn