Index up, fund down: five reasons for the gap in your statement

In the morning the headline said the American index closed the month higher. In the evening you opened your account, and the fund that is supposed to track that very index shows a minus. A small one, but a minus. You took a screenshot, sent it to your partner with a question mark, and neither of you knew what to say.

Two thoughts tend to show up at a moment like this. "Someone is taking our money." Or, the one that feels worse: "We obviously didn't understand what we bought." From there it's a short walk to one of two familiar fixes: sell the fund "that doesn't work", or ask on a forum and collect twenty answers that contradict each other.

Two numbers, two different questions

Part of you wants a verdict now: "The fund is bad. Done." A quick verdict closes the discomfort without opening a single document, and that's what it offers: quiet. Another part wants to understand. Not to become an expert, just to feel that the money isn't doing things behind your back.

That wish to understand is right about something important: the headline and your statement often measure different things. A different currency, a different moment, sometimes a different version of the index. Nobody lays the differences side by side, so confusion is the expected result, and it says nothing about you: nobody ever handed you the list of questions that connects the two numbers.

A checklist before a verdict

Here's the goal: go through the checklist for one account and write down which reason explains the gap. No conclusion from a single headline, no finance course, and no selling or transferring before the list is done. A gap often has a mechanical cause, and you can find it. What people describe after a check like this is that "should we move?" becomes a question about a known number; if there's a decision to make, it's yours.

This is general information, not personal advice, and nothing here is about a particular fund, for or against. Choosing a track, transferring, or withdrawing from a kupat gemel (קופת גמל, a provident fund) or keren hishtalmut (קרן השתלמות, a tax-advantaged savings fund) is pension advice under Israeli law when given to a specific person; this article explains how the instruments work, and a licensed pension adviser can look at your case.

Five usual suspects, plus one for pensions

1. Which currency each number is in

The American index is reported in dollars. If your fund is measured in shekels and isn't hedged, the move in the exchange rate goes straight into the return you see. An invented example, for illustration only: the index rose 1% in dollars over the month, and the dollar fell 2% against the shekel. In shekels, a fund that tracked the index perfectly can show roughly minus 1%. A hedged fund looks different, and hedging has its own cost. Currency and hedging get an article of their own.

2. What the management costs

Management fees and other costs come out of the fund every day, quietly. In one month the difference is small, but it repeats every month, so it shows up as a steady gap rather than a surprise. The fund's information sheet lists the fee, and sometimes other costs. What fees do over the years is its own subject; the block below shows it in numbers.

What an annual management fee takes over time

Yearly fee on the balance0.5%

What the fee takes over the years

₪40,971

₪577,097 at the end with the fee, ₪618,068 without it

The rate here is an assumption for the example, not a forecast.

The 5% a year in the block is an assumption for the calculation, not a forecast. It's modest on purpose, so you can see the fee's effect on its own. The 0.5% fee is an example, not any particular fund's figure.

3. Whether the headline index includes dividends

Many headlines report a price index, which measures only the change in share prices. There is also a total return index, which assumes dividends are reinvested. A fund benchmarks itself to one of them, and what happens to dividends along the way, whether they're accumulated or paid out and whether tax comes off them, affects the number. So, two questions: which index exactly does the fund compare itself to, and which one did the headline mean?

4. Which day and hour each number refers to

The headline refers to the New York close. A fund traded in Tel Aviv is priced on the local exchange's trading calendar, which doesn't always line up with New York's. Some funds are priced once a day, at a set hour's rate. So a month can "close" in two places at two different moments, and one day's move lands in this month for one and next month for the other. Check the current trading days and hours on the Tel Aviv Stock Exchange website; they change from time to time.

5. The fund's tracking difference

Even after all four, an index fund doesn't copy its index perfectly. The difference between its return and the return of the index it follows is called the tracking difference. Look for it in the fund's information sheet and periodic reports. If you want to understand how funds that follow the same index differ, this comparison helps.

6. For pensions and provident funds: what the track actually holds

An "equity" or "general" track in a pension, kupat gemel or keren hishtalmut isn't one index. It's a mix: Israeli and foreign shares, bonds, cash, sometimes unlisted assets. The track's investment policy and asset mix are published on Gemel-Net and Pension-Net, the Capital Market Authority's public tools, and that's where you see what it even makes sense to compare against.

The checklist for your own fund

• Which currency is the index in, and which is the fund in? Is it hedged?
• What are the management fee and other costs, per the information sheet?
• Did the headline mean a price index or a total return index?
• What date and hour does each of the two numbers refer to?
• What tracking difference does the fund report?
• Pension or provident fund: what does the track hold, per Gemel-Net or Pension-Net?

0 of 6 done

In AlphaHome: on the pension page (/app/pension) each account shows its balance and both fee rates from the quarterly statement, so for those accounts one question on the list is already answered in front of you. An account linked to its fund in the public data.gov.il datasets also shows the fund's published average fees and yields beside yours, in a table, with no verdict.

When the list doesn't close the gap

"We checked everything and there's still a gap." The suspicion rising now protects you from feeling cheated, and it's fine to listen to it. Today: one written question to the fund manager, with both dates and both numbers you compared. Next time: note the date and hour of every number before you compare it.

"The gap comes back every year." Wanting to close the topic fast is understandable, but now there's a number. Today: write the yearly gap next to the fees. What people in this spot describe is treating it as information about cost or tracking, weighed calmly, sometimes with an adviser; the decision is yours. Next time: run the list once a year on a fixed date, not on a headline day.

Your partner is already sure the fund has to go. It's the same pull toward a quick verdict, just in someone else, and it's understandable. Today: go through the first two questions together. Next time: keep the list where both of you can see it, so the conversation starts from it.

Asking the numbers the right questions

Draw a conclusion from one headline, and every headline brings a new conclusion. That's not a criticism; it's what happens when two different numbers are read as if they were one. Keep a short list, and you get an answer, or, when there isn't one, a good question to ask.

Next time the headline and the account disagree, you won't have to guess which one is wrong. You'll need six questions and one sheet of paper.

This week: pick one account, open its information sheet or its track on Gemel-Net, and fill in the answers to the list on paper. If the account you picked is a pension, provident or study fund, type its fees into the pension page in AlphaHome.