ETF Trends
ETF Trends

Israel’s economy is surpassing expectations, and if it continues this way, it could deliver solid performance to its exchange traded funds (ETFs).

The country saw growth in the first quarter, even though it was a slightly slower rate than in the previous two. GDP expanded at a rate of 5.4%, while it grew 5.3% in 2007 – faster than the United States, Europe and Japan, reports Trang Ho for investor’s Business Daily.

It’s projected to grow 3% this year, owing much to expectations that a slowing U.S. economy will affect Israel. We are their heaviest trading partner, and exports make up one-third of the country’s GDP. The United States
accounts for 37% of trade, and Europe for 20%.

Until this year, there was no way for U.S. investors to get single-country exposure to Israel’s growing economy, but now there are two options: the iShares MSCI Israel Index (EISand the brand-spanking-new NETS TA-25 Index (TAV) from Northern Trust.

Since its launch on March 28, EIS is up 14.6%. Teva Pharmaceuticals (TEVA), the world’s largest generic drug maker, is the largest component in the fund at 21.9% of the holdings. EIS is also heavily weighted in industrial materials (22.1%) and financial services (21.2%). EIS’s expense ratio is 0.68%.

TAV, launched on May 21, focuses on the Tel Aviv 25 Index, the most commonly used local index. The exposure to individual companies is a little more spread out, and no company is weighted more than 9.2%. Teva comes in with an 8.8% weighting. Financials make up 29.8% of the fund, followed by materials (21.7%), telecom (13.5%) and health care (12.4%). The expense ratio is 0.7%.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.