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The Hedge Funds market within the Investment Funds Market in Israel is experiencing moderate growth, influenced by factors such as evolving investor preferences, regulatory changes, and a growing interest in alternative investment strategies among local investors.

Customer preferences: Investors in Israel are increasingly gravitating towards hedge funds as they seek diversification and higher returns in a volatile market. This shift is influenced by a growing awareness of alternative investment strategies among younger demographics, who prioritize innovative financial solutions over traditional assets. Additionally, cultural factors, such as a strong entrepreneurial spirit, are encouraging local investors to explore riskier ventures. The rise of digital platforms for fund access is further facilitating this trend, making hedge funds more accessible to a broader audience.

Trends in the market: In Israel, the hedge fund market is experiencing a notable rise as investors seek alternative avenues for higher returns amidst economic volatility. The trend is marked by an increasing interest from younger investors, who are drawn to innovative strategies that challenge traditional investment norms. This shift is bolstered by a robust entrepreneurial culture, encouraging local investors to embrace riskier assets. Furthermore, the emergence of digital platforms is enhancing accessibility, allowing a wider audience to engage with hedge funds. This evolution signifies a potential reshaping of the investment landscape, prompting traditional funds to adapt and diversify their offerings to remain competitive.

Local special circumstances: In Israel, the hedge fund market is uniquely influenced by a blend of cultural and regulatory factors that set it apart from other regions. The country's strong emphasis on innovation and technology fosters a dynamic environment for hedge funds, attracting a tech-savvy investor base eager to explore alternative investments. Additionally, Israel's regulatory framework supports a more flexible approach to fund management, allowing for diverse strategies that appeal to risk-tolerant investors. This combination of cultural entrepreneurship and favorable regulations is reshaping the investment landscape, encouraging both domestic and international participation in hedge funds.

Underlying macroeconomic factors: The hedge fund market in Israel is significantly shaped by macroeconomic factors such as global market trends, domestic economic stability, and fiscal policies. The ongoing global shift towards alternative investments, driven by low-interest rates and market volatility, encourages Israeli investors to diversify their portfolios through hedge funds. Additionally, Israel's robust economic indicators, including GDP growth and low unemployment rates, foster investor confidence. Fiscal policies that promote innovation and entrepreneurship further enhance the attractiveness of hedge funds, while geopolitical stability in the region contributes to a favorable investment climate, drawing both local and international capital into the market.

Data coverage:

The data encompasses B2C enterprises. Figures are based on financial values/ transaction values/ turnover ratios/ number of funds data within the investment funds market.

Modeling approach / Market size:

Market sizes are determined by both a bottom-up and top-down approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use market research & analysis, and data from European central banks, World Bank, national central bank statistics, and international organizations, such as OECD, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, namely gross domestic product (GDP), consumer price index(CPI), lending interest rate, central bank interest rate, employment rate, secured overnight financing rate (SOFR), and tax rates. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In the market, we use the HOLT-damped Trend and ARIMA methods to forecast future development. The main drivers are GDP per capita, consumer price index (CPI), and central bank interest rate.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.