CPI-linked mutual funds raised NIS 400 million last week

Shekel devaluation expected to markedly lift indexes in coming months
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Mutual funds linked to the consumer price index last week raised some NIS 400 million, in anticipation that the sharp devaluation in the shekel in recent months will lift indexes in coming months.

The public's rush to invest in mutual funds subsided last week, attracting small activity compared with the intensive activity mutual funds have attracted since the interest rate was cut in December, industry sources said.

The sources said that last week about NIS 250 million was withdrawn from shekel investments due to uncertainty surrounding the interest rate. The governor of the Bank of Israel is considered likely to raise key lending rates in coming months.

Today the governor is expected to announce that interest rate for February will remain unchanged at 3.8%.

But the strengthening of the dollar against the shekel, which is expected to continue, resulted in about NIS 150 million being last week deposited in forex-linked funds. Some NIS 400 million was deposited in CPI-linked funds.

In the weeks following the cut in interest rate, funds attracted irregular activity, the public daily streaming millions of shekels into forex-linked funds and CPI-linked instruments. Stock instruments attracted significant deposits. But over that period billions of shekels were withdrawn from shekel instruments.

The sources said that today has been especially calm, with no significant activity posted in the funds industry.