Surprising and growing innovation: Harel Finance concludes an excellent year

An analysis of the results shows that the impressive achievement is mainly due to new products in mutual funds, innovative ideas in portfolio management and more.

 Top Harel staff in front of the Tel Aviv office. (photo credit: elad kalig)
Top Harel staff in front of the Tel Aviv office.
(photo credit: elad kalig)

Harel Finance, Harel Group’s investment house, demonstrated high double-digit growth in revenue and profitability in 2021 thanks to new products, refreshing ideas, and delegating more powers and roles to its employees

Harel Finance’s growth rate in 2021 is more reminiscent of a technology company than an investment house. Unprecedented growth, record profitability and new areas of activity are expected to make 2021 a record year for Harel Finance. An analysis of the results shows that the impressive achievement is mainly due to new products in mutual funds, innovative ideas in portfolio management and the opportunity given to more and more employees to take part in promoting groundbreaking ideas. No wonder one of the goals of the investment house for 2022 is to increase the number of employees in various positions.

The 2021 third quarter at Harel Finance was a record quarter for the company and it capped off three quarters of extraordinary growth in revenue and profitability. In the third quarter alone, the investment house’s EBITDA jumped by almost 40% from the corresponding quarter in 2020 to NIS 19 million. From the beginning of the year (the first three quarters), the profit before tax jumped by 64% and reached NIS 54 million. The company’s revenues jumped by 17% in the third quarter and from the beginning of the year they amounted to NIS 183 million.

Harel Finance currently manages over NIS 60 billion (as of the beginning of December), compared to only NIS 52.1 billion managed by the company in December 2020.

Harel, insurance and finance group logo (credit: HAREL INSURANCE COMPANY)Harel, insurance and finance group logo (credit: HAREL INSURANCE COMPANY)

 

Strongly entering the investment provident fund

The Harel Finance investment house combines the activities of the Harel Group in the capital market and does not include long-term savings activities. In this sense, Harel Finance is different from other competing investment houses, as it focuses on short- and medium-term savings, mainly mutual funds and portfolio management. In recent years, it has also expanded its activities to the field of alternative investments. In April 2021, it entered the Investment Provident Fund world for the first time - where it became the leading body in returns in the general investment risk profile from the beginning of 2021 (as of the end of November).

 

Innovation in portfolio management: a combination of all worlds

In the field of portfolio management, along with the continuous growth, which is contrary to the market trend, this year the company stood out with a unique investment profile for accredited investors. Like many great ideas, thinking about the product was born out of distress. The investment portfolio management industry has been facing increasing competition in recent years from competing investment channels, one of which is hedge funds. The company came up with an idea to combine the benefits of a hedge fund with those of a managed portfolio and managed to produce a surprising product that raised over NIS 250 million this year alone.

 

NIS 1 billion in new funds

In the field of index tracking funds, this year Harel Finance launched 20 products that raised NIS 1 billion in areas such as electric vehicles, cleantech, blockchain and agritech. The company was also a pioneer in the field of dollar-denominated products, which made it the leading investment house in Israel in the number of dollar-denominated solutions in mutual funds.

How did the investment house manage to issue such a large number of products in a single year? The answer lies in the company’s decision about a year ago to set up a product development team, consisting of creative employees on the one hand and employees from the relevant departments for promoting these products on the other hand.

 

Go with the big ones in Alternative

Harel Finance’s alternative business, established less than 3 years ago, currently manages over $200 million, and this year it launched a new credit fund called HAMAGEN Europe (an acronym for Real Estate Backed Loans in Europe). Harel’s alternative arm is expected to be the first in the industry to launch “co-investment funds” in the beginning of 2022, in which investors will be able to invest alongside Harel Insurance in specific transactions in untraded debt, real estate and private equity mainly in technology, growth and secondary investments. The funds will be established by the Harel Group and will be managed and marketed to clients by Harel Finance Alternative.

Not surprisingly, Harel is one of the largest and experienced institutional investors in Israel operating in the field of alternative investments with assets of more then NIS 65 billion in non-marketable investments in Israel and around the world.

Harel Finance CEO Tal Kedem: “Harel Finance’s achievements in 2021 are the result of a winning team of employees and a leading team of executives combined with a solid backing of a valuable, strong and powerful group that leads in the fields of insurance and finance. I am proud that the great involvement of employees in all the processes at the investment house succeeds is leading us time and time again to great achievements.”