This woman tells the richest Israelis where to put their money. This is her advice for investors
Stock markets are brushing all-time highs despite the coronavirus pandemic, and the burning question in the capital markets is whether there’s a bubble — and whether it’s about to burst. Orit Raviv Swery, founder of Rosetta Investments Multi-Family Office has an answer: “Interest rates really are beginning to go up and that will be a painful blow, but it won’t come soon.”
Under such a scenario, what should you do with your money? Raviv Swery elaborates, “The governments and the banks are obligated to ensure that the world won’t enter a serious recession, and will continue with their policy of expansionary monetary policy and cheap money. Therefore, in the short term there could be a sharp downward fluctuation and temporary panic, but we won’t see a significant blow. Inflation and increasing interest rates could be a swift and painful process, but it won’t be coming soon, which is why I recommend continuing to watch the stock market.”
Raviv Swery has 35 years of market experience. She has managed a comprehensive portfolio in companies belonging to Sammy Ofer, and held several positions at banks. Since 2008 she has been working mainly with wealthy families, to whom she offers her services only if they want to invest at least $10 million. She recommends to these clients that they invest their family wealth long-term, mainly abroad, in complex tools that she says provide the alpha — meaning they outperform the market, instead of tracking the indices. She recommends that they invest part of their capital in non-financial corporations such as Israeli manufacturers.
Returns in the U.S. are increasing, unemployment is at a high and so is the stock market. How do you invest in this scenario?
Raviv Swery: “The thinking has to be dynamic. Up until 2020 we were conservative, but in 2020 opportunities and volatility arose that enabled short- and long-term profits. There’s no question that money will continue to flow into the stock markets even though they look fragile.
“We have to beware of the herd mentality and capital all flowing into the same place. The bubble today is not the same bubble. There are no solid investments. Bonds have turned into a dangerous world that is far less appealing for investment. Therefore, the stocks that are more highly regarded, speculative and pyramid stocks, are where you should be. You simply have to choose genuine investments there.”
How would you invest 100,000 shekels ($330,000) given the current state of the market, presuming this isn’t the investor’s only money?
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Raviv Swery’s instinctive response is, “you have to be careful.” She believes that such a small sum is better “left in your bank account.”
And nevertheless?
“I would invest in stocks, with a preference for shekel-denominated investments even when you’re investing globally. Concentrate on sectors where investments will let you benefit from the capital market’s price increases and that reflect high risk, and not so much in growing companies that have no profit.”
25% in medical services
Raviv Swery suggests that medical services would be an interesting field for long-term investment, and that 25% of the portfolio could be invested in medical companies with operations in medical equipment, digital medicine and medical services in particular. “These fields usually increase more than the market and decline less than the market. When the pandemic is raging and there are many restrictions on physical access to health care, these companies meet an infinite human need for health care services.”
Investors who don’t know how to choose individual companies can buy into an exchange-traded fund that tracks an index such as the MSCI World Health Care Index, she says.
40% in infrastructure
Another 40% of the portfolio could be allocated to infrastructure. “All over the world governments and central banks are seeking to kick-start the infrastructure industry, as they increase government spending and put in place an expansionary policy not just monetarily, but by increasing investments in public infrastructure in order to increase employment and improve efficiency and wellbeing,” Raviv Swery says.
A U.S. exchange-traded fund that tracks this market is the iShares Global Infrastructure ETF, she notes.
25% in finance
Another field Raviv Swery likes is finance and banking. “The industry is kind of like a pipeline that channels governments’ monetary policy to the public. If we compare it to a car, when the government steps on the gas pedal, the banks play an important role in the global economy’s ignition. They streamline, improve technologies and services, and thus profitability,” she says.
Investors can buy into the U.S. banking system via the SPDR SP bank ETF, she suggests. Israeli investment houses offer similar ETNs tracking the Tel Aviv Stock Exchange bank index.
Raviv Swery also notes that non-bank financial institutions could benefit from the current situation. “They will benefit from high demand and excellent returns, as long as they are technological, more effective than the banks and willing to take various risks,” Raviv Swery says. One such company is the TASE-traded Menif Financial Services, she notes.
5% in technology
Raviv Swery also has her eyes on technology: “Technology and innovation can be found in all the non-financial industries: medicine, infrastructure, water, food, transportation, energy, communications, agriculture, insurance and finance, and content and culture. It’s the field that pulled the entire market upward. There was definitely a reason for that, in a world that demands creativity, change and adaptation to new situations. However, on its own as an investment in a single company, it involves a very major risk,” she says.
“Therefore, for someone who’s investing 100,000 shekels, I would be modest. Anyone who wants to take a speculative gamble and increase that, with relevant knowledge of the field, can do so.”
5% in blockchain
Even veteran investors cannot ignore Bitcoin, a virtual coin that a few years ago was worth a few dollars and is now trading at more than $57,000. “Digital currencies will be our world in the near future. Bitcoin has become the new gold; the technology could change the world and the capital market. Registration of securities on the blockchain is just beginning in New York.”
But she warns, “Anyone who buys cryptocurrency has to know that it’s a gamble – it’s very volatile and an investment could be painful. It gives me the impression of a casino. Traders have a physical wallet. Therefore, do it minimally, in order to learn how that world works. Average investors are better off investing via ordinary stock market mechanisms, because if everything collapses, they can get out.” One such instrument is the Grayscale Bitcoin Trust exchange-traded note, she says.
And what about Rosetta?
“We invest in hedge funds, direct non-bank loans and in general, investments that are alternatives to traditional stocks and bonds. After we choose our tools and provide for insurance, the client decides whether to invest. We don’t sit in front of the screen all day buying and selling stocks and options.”
Raviv Swery measures her success primarily at extreme points. She says that in March 2020, when the market dropped by 35% or more, “our portfolio declined by 3% on average. The greatest decline was 7% due to one of the portfolio’s exposure to Israeli stocks. The portfolios finished 2020 with returns of 10% to 14%.”