Market Vectors has added to its suite of international equity exchange-traded funds (ETFs) with the launch of the Market Vectors Israel ETF (ISRA) on the NYSE Arca. The fund is designed to provide investors with broad, diversified exposure to Israeli stocks.
The Market Vectors Israel ETF (ISRA) offers broad, diversified exposure to Israeli stocks.
The fund is linked to the BlueStar Israel Global Index, a rules-based, adjusted market-capitalisation index tracking the performance of Israeli and Israeli-related companies across the large-cap, mid-cap and small-cap segments.
Amrita Bagaria, ETF product manager at Market Vectors, said: “Israel is uniquely positioned to offer investors emerging market growth characteristics with a developed market approach to economic management. The country has a vibrant economy with broad sector representation. With that in mind, we have selected an index for ISRA that best represents the Israeli market and captures the full spectrum of economic growth potential.”
To qualify for inclusion in the BlueStar index, a company must be listed, domiciled, or founded in Israel, or it must generate the majority of its revenues in Israel. Stocks in the index generally trade on the Tel Aviv Stock Exchange, but also include Israeli-domiciled companies listed outside of the country on exchanges such as the NYSE, Nasdaq and the London Stock Exchange.
To ensure diversification, weights are adjusted so that no single constituent is assigned a weight greater than 12.5%. In addition, the cumulative weight of all constituents with an individual weight of 5% or greater is capped at 50% of the weight of the index.
Steven Schoenfeld, an indexing veteran, and founder and chief investment officer of BlueStar Indexes, said: “In designing the index, we wanted to set a high bar for inclusion. It was important that each constituent have a deep involvement in Israel’s growth. We believe we’ve been able to accomplish that, and we are pleased to provide the underlying index for ISRA.”
BlueStar partnered with the International Securities Exchange (ISE) to design and build the index. It is independently calculated and maintained by Standard & Poor’s.
Kris Monaco, Head of ISE ETF Ventures, said: “We are thrilled to partner with BlueStar Indexes as they continue to be at the forefront of delivering insight and access to the investable market of publicly-traded Israeli companies.”
The index’s top three sectors are Information Technology (representing 29.9% of the holdings), Health Care (26.3%) and Financials (19.1%). It has 93 constituents, including well-known names such as Teva Pharmaceutical Industries, Perrigo Co, Checkpoint, Amdocs and Mellanox (as of June 24, 2013).
The fund has a net expense ratio of 0.59%.
The arrival of Market Vectors’ new fund provides some welcome competition to the less diversified NYSE Arca-listed iShares MSCI Israel Capped Investable Market Index ETF (EIS), which, following the closure of the NETS TA-25 Index ETF back in 2009, has been the only dedicated Israeli ETF available outside of Israel. EIS has $75.5 million in assets.