The Shekel, the Dollar and Your Returns
Why a return in dollars and a return in shekels are not the same number, and what that means for an Israeli portfolio.
Your return is measured in shekels
An Israeli investor buying a dollar asset carries two exposures at once: to the asset, and to the dollar against the shekel. A stock up 15% in dollars over a period when the dollar weakened against the shekel returns less than 15% in shekels, sometimes considerably less.
It works both ways. The same exposure raises the shekel return when the dollar strengthens, so it is not purely a risk but an additional component of the portfolio worth deciding on deliberately.
When it matters and when it matters less
Over many years currency moves tend to be small relative to the gap between the returns of different assets. Over a few months the currency can easily be the dominant factor in the outcome.
The practical consequence: the shorter the horizon, the more currency exposure matters relative to everything else.
What you can do about it
Three practical options: leave the exposure as it is, choose currency-hedged products that remove it at a cost, or balance shekel and dollar assets so the portfolio as a whole depends less on one direction.
There is no single right answer, and there is a large difference between deciding on this exposure and discovering it afterwards when the shekel return does not look like the one you expected.
Frequently asked questions
Why does my return differ from the US index return?
Because your return is measured in shekels. An index up in dollars delivers more or less in shekels depending on the exchange rate move over the same period.
Should currency exposure be hedged?
That is a personal decision. Hedging removes the dependence on the exchange rate and carries a cost. VAQO is not an investment adviser.
When does currency exposure matter most?
Over short horizons. The longer the holding, the smaller the weight of currency movement in the total result relative to the asset itself.
Israeli companies we do cover
Tel Aviv market data is not available here. Israeli companies listed on Nasdaq and the NYSE — Teva, Elbit, Check Point, CyberArk, NICE, monday.com and others — do carry live prices and full analysis.
Israeli stocks on Wall Street →
More on the Israeli market
- The TA-35 Index
- Israeli ETFs and Index Funds
- Capital Gains Tax on Investments in Israel
- How to Start Investing in Israel
This is neither investment advice nor tax advice.
Last updated: 2026-09-27