TA-125 Index

The **TA-125 Index** is a flagship Israeli equity index maintained by the Tel Aviv Stock Exchange (TASE). It tracks 125 large and investable shares listed on TASE, drawn from the TA-35 and TA-90 indices, and is widely used as a benchmark for the Israeli public equity market.^[1]

Overview

The TA-125 is designed to represent a broad segment of Israel’s listed equity market while remaining investable enough to support index-linked products. TASE describes it as its most significant index and as the benchmark index for the Israeli economy.^[1] It is broader than the TA-35 Index, which contains 35 large-cap shares, because it combines those large-cap shares with the TA-90 universe, creating a 125-share measure of large and mid-cap Israeli equities.^[1]

The index is a **tracking index** calculated on a **gross total return** basis. This means the calculation reflects price movements and the reinvestment of gross distributions according to the index methodology, rather than being only a price index.^[1] TASE disseminates the index in real time every 15 seconds during the trading day, making it usable for market monitoring, exchange-traded products, and performance comparison.^[1]

The index is commonly referenced by Israeli asset managers, pension and provident fund managers, brokers, and market commentators as a broad measure of domestic listed shares. It is also part of TASE’s broader index infrastructure, which includes narrower sector indices, equal-weight versions, and derivative or thematic indices based on the same underlying market.

History

The TA-125 began on 2 January 1992 with a base value of 100, but it was originally launched as the **TA-100 Index**.^[1] Under the earlier structure, the TA-100 combined the shares in the TA-25 and TA-75 indices. TASE later reformed its equity indices, and on 9 February 2017 the index was expanded from 100 to 125 shares, reflecting the new TA-35 and TA-90 structure.^[1]

The 2017 equity-index reform was part of a broader change in TASE’s index methodology. TASE’s annual reporting described the reform as intended, among other objectives, to reduce concentration in the exchange’s indices and make index composition more stable. The reform increased the number of shares participating in TASE indices, reduced maximum weights in many indices, introduced rules to help financial-product issuers track indices more accurately, and raised the minimum free-float requirement for the leading indices.^[3]

The change from TA-100 to TA-125 also reflected a reorganization of Israel’s main listed-equity benchmarks. The TA-35 replaced the older TA-25 as the primary large-cap index, while the TA-90 replaced the older TA-75 as the next tier of large and mid-cap shares. The TA-125 therefore became the combined benchmark of these two groups rather than a simple continuation of the earlier 100-share structure.^[1]

Composition and eligibility

The TA-125 contains 125 shares. TASE states that the index consists of the 125 shares with the highest market capitalization that are included in the TA-35 and TA-90 indices.^[1] Its additional eligibility condition is therefore direct inclusion in either the TA-35 or the TA-90, rather than selection from the entire exchange without reference to those sub-indices.^[1]

The index uses TASE’s **Rimon**, or premium equity, universe as its index universe.^[1] In TASE’s 2021 annual reporting, the exchange described the flagship indices, including TA-35 and TA-125, as including shares that meet the criteria of the Rimon universe, while growth indices use the less stringent Tamar universe.^[3] The distinction matters because it links flagship-index eligibility to criteria intended to support liquidity, public float, and investability.

The Bank of Israel has summarized the eligibility framework for TASE’s leading equity indices as including threshold conditions that TASE establishes and updates from time to time. These conditions have included minimum rate and value of public holdings, minimum equity price, a connection with Israel, and tradability.^[2] TASE’s TA-125 page separately identifies the index domicile requirement as “Only Local Linked,” meaning that eligible constituents must satisfy TASE’s Israeli-orientation rule.^[1]

Because the TA-125 is the combined result of the TA-35 and TA-90, it is generally a broader representation of TASE-listed equities than the TA-35 alone. However, it does not include every listed share on the exchange. Smaller companies outside the TA-90, shares that fail free-float or other investability criteria, and securities outside the relevant equity universe are not part of the index unless they qualify under TASE rules.

Weighting and calculation

The TA-125 is calculated using TASE’s equity-index methodology. The Bank of Israel explains that a stock-exchange index is a numerical data point representing the average price of securities in a defined group relative to benchmark values set at introduction, and that the value changes with constituent prices and each security’s weight in the index.^[2]

For the TA-125, TASE states that the ranking criterion is **market capitalization** and that the index has a **5% weight cap**.^[1] A weight cap limits the maximum influence of any single constituent in the index. Such caps are important in relatively concentrated markets, because a few very large issuers can otherwise dominate benchmark performance. TASE’s 2017 reform explicitly aimed to reduce index concentration, and reduced maximum weights were one of the tools used in that reform.^[3]

The index is calculated as a **gross total return (GTR)** index.^[1] In practical terms, an investor or analyst comparing products to the TA-125 should note whether a product, chart, or data vendor is using the same return version. A price-only version and a gross-total-return version can diverge over time because the latter incorporates distributions according to the index rules.

TASE publishes the TA-125 every 15 seconds during trading.^[1] This near-real-time dissemination supports intraday use by market participants, though long-term performance analysis usually uses official closing index levels. TASE also publishes constituent information and historical data through its market-data pages.^[4]

Review cycle and rebalancing

The TA-125 is reviewed semi-annually. TASE states that component updates occur at the end of the trading day on the first Thursday in May and November.^[1] The free-float record date is 31 March for the May update and 30 September for the November update.^[1] TASE also publishes an update record date and an update notice date, with the notice date two weeks before the index update and the record date three weeks before the update.^[1]

The semi-annual review cycle allows the index to reflect changes in market capitalization, liquidity, public float, and eligibility, while avoiding continuous turnover. The Bank of Israel has also noted that the composition of TASE equity indices is updated every half-year, while the methodology used to calculate the indices may vary according to decisions by the Tel Aviv Stock Exchange.^[2]

TASE identifies the TA-125 as having a **fast track** for new IPO or dual-listed shares.^[1] This provision allows certain newly listed or newly dual-listed companies to enter the index outside the ordinary process if they satisfy the applicable rules. Fast-track mechanisms are common in index systems because very large or liquid new listings may otherwise remain outside a benchmark for months despite being relevant to the market.

Rebalancing can affect trading activity because funds and other products that track the index may need to buy, sell, or adjust holdings when constituents and weights change. The index rules, however, are mechanical and do not represent a judgment by TASE about the investment merits of any individual company.

Relationship to TA-35 and TA-90

The TA-125 is closely linked to the TA-35 and TA-90. TASE states that its constituents are shares included in the TA-35 or TA-90.^[1] The TA-35 is the narrower large-cap benchmark, while the TA-90 represents the next group of eligible shares. Together they make up the TA-125.

This structure means that the TA-125 is less concentrated than the TA-35, but it is still weighted by market value and subject to a 5% constituent cap.^[1] Large banks, technology companies, real-estate companies, insurers, and industrial issuers can therefore have meaningful influence depending on their free-float-adjusted market values and applicable caps.

The Bank of Israel has described the Tel Aviv 35 and Tel Aviv 125 as the leading equity indices on the exchange and as flagship indices. It notes that the TA-35 tracks 35 equities traded at the highest market value and the TA-125 tracks 125 equities so traded.^[2] This official central-bank description reinforces the TA-125’s role as a broad headline measure of TASE-listed shares.

Use in investment products and benchmarking

The TA-125 is used as an underlying benchmark for index-tracking financial products. TASE states that TA-125 financial products are the most popular among TASE indices.^[1] Such products may include exchange-traded funds, index funds, or other instruments structured to replicate or reference the index. The existence of these products reflects the index’s role as a standardized measure of domestic equity exposure.

For institutional investors, the index may be used as a benchmark for evaluating the performance of Israeli equity allocations. Pension funds, provident funds, study funds, and mutual funds may compare actively managed portfolios against broad indices such as the TA-125, although specific mandates can differ substantially. In Israeli savings markets, the TA-125’s relevance is connected to the broader role of listed equities in long-term savings products such as kupot gemel and keren hishtalmut, depending on each product’s investment policy.

For international investors, the index provides a reference point for Israeli equities traded in shekels on TASE. However, foreign investors typically also consider currency exposure, market-access arrangements, tax treatment, and the difference between domestic Israeli indices and global Israel-focused indices compiled by international index providers.

Market interpretation

Movements in the TA-125 are often interpreted as a broad indication of sentiment toward Israeli listed equities. Because it includes both large and mid-cap shares, it may capture developments beyond the most heavily traded blue-chip companies. At the same time, it is not a complete measure of the Israeli economy. The index covers listed companies that meet TASE’s eligibility rules, while large parts of the economy—private companies, government activity, small businesses, and unlisted subsidiaries—are outside the index.

Sector weights can change over time as share prices, corporate actions, listings, delistings, and index reviews alter the market-capitalization profile of TASE. The Bank of Israel has noted that analysis of index movements can be improved by calculating the contribution of each security and aggregating those securities by characteristics such as industry.^[2] This approach is useful because a headline index move may be driven by a concentrated set of sectors rather than by the whole market equally.

The TA-125 is therefore best understood as a liquid, rules-based benchmark for Israeli listed equities, not as a direct measure of gross domestic product, household wealth, or the full corporate sector. Its movements can reflect local interest rates, exchange-rate expectations, global equity conditions, geopolitical risk, sector-specific news, and constituent-level events.

Governance and regulation

The TA-125 is maintained by the Tel Aviv Stock Exchange, which calculates and publishes TASE indices according to its rules and methodology.^[2] TASE is the operator of Israel’s principal securities exchange and is central to the country’s equity-market infrastructure.

The broader Israeli capital-market regulatory framework includes the Israel Securities Authority, which supervises securities markets and public offerings, and the Bank of Israel, which monitors financial stability and market developments. The Bank of Israel uses TASE index data in financial-market analysis and has described the importance of granular index analysis for monitoring risks and understanding capital-market developments.^[2]

Index inclusion should not be interpreted as regulatory approval of a company, a credit assessment, or a recommendation. It is the result of published index rules concerning market value, eligibility, float, tradability, and related requirements.

Limitations

The TA-125 has several limitations as a benchmark. First, it is market-capitalization based and therefore gives greater influence to larger constituents, even with a 5% cap.^[1] Second, it excludes companies that do not meet TASE’s eligibility rules, including smaller or less liquid shares. Third, as a shekel-denominated domestic index, it may not reflect returns experienced by investors measuring performance in another currency.

Fourth, index-tracking products may not exactly match index returns because of fees, taxes, trading costs, cash drag, securities-lending practices, timing differences, or replication methods. Finally, the index is a backward-looking numerical measure: it records market prices and distributions according to methodology, but it does not predict future returns or indicate whether Israeli equities are cheap or expensive.