US-based private equity firm Veritas Capital has raised about US$424 million (NIS 1.5 billion) from Israeli investors for its ninth defense technology fund. This exceeded its initial target in Israel by US$141 million (NIS 500 million).

The fund, Veritas Capital Fund IX, aims to raise US$10 billion globally but has already surpassed that, reaching US$14 billion. Its previous fund closed in 2022 at US$10.65 billion.

Veritas, founded in 1992 and led by CEO Ramzi Musallam, manages about US$50 billion, focusing on government, national security, and advanced technology.

The fundraising comes amid ongoing US trade tensions with China, Canada, and Mexico, which have led to volatility in public markets.

🔗 Source: Calcalist

🧠 Food for thought

1️⃣ Trade tensions historically drive significant market value destruction

The current market volatility echoes previous trade war periods that severely impacted investor portfolios.

During the 2018-2019 US-China trade tensions, Deutsche Bank estimated that approximately $5 trillion in equity market value was lost due to foregone stock price appreciation, highlighting the substantial cost of protectionist policies 1.

This volatility wasn’t limited to small market adjustments. The S&P 500 experienced its worst single-day loss of 2019 (dropping 3%) when China devalued its currency in response to US tariffs, demonstrating how quickly trade disputes can escalate into market crises 2.

Historical data shows how trade tensions create ripple effects beyond direct tariff impacts, with the 2019 events triggering flight to safety that pushed 10-year Treasury yields to their lowest levels since 2016, suggesting similar defensive positioning might occur in today’s environment 2.

While Goldman Sachs estimated only a 0.2% direct GDP impact from the 2018-2019 trade war, financial markets overreacted significantly. This suggests investors should anticipate amplified market responses to trade news in the current climate 3.

2️⃣ Market divergence creates opportunities for international asset reallocation

The current underperformance of US markets compared to European indices mirrors patterns seen in previous trade tensions, where uncertainty drove capital toward markets perceived as less exposed to trade conflicts.

During the 2018-2019 trade war, the Federal Reserve specifically cited trade concerns in its rate cut decisions, demonstrating how trade policy directly influences monetary policy differences across markets and creates divergent investment environments 3.

This divergence explains why alternative investments with international exposure are attracting substantial capital, as investors seek diversification away from US market volatility.