Van Eck Global’s ETF unit Market Vectors on Wednesday introduced a new fund designed to provide investors with exposure to Israel.

Market Vectors Israel ETF (NYSEArca: ISRA) will charge a net expense ratio of 0.59% and tracks the BlueStar Israel Global Index.

The benchmark is comprised of Israeli and Israeli-linked companies. It replicates the performance of the largest and most liquid companies, as well as mid-cap and small-cap companies that display sufficient liquidity.

To qualify for inclusion in benchmark, 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, according to Van Eck.

ISRA will compete with iShares MSCI Israel Capped ETF (NYSEArca: EIS), which has an expense ratio of 0.60% and holds assets of about $77 million. [Israel ETF]

“Israel is uniquely positioned to offer investors emerging market growth characteristics with a developed market approach to economic management,” said Amrita Bagaria, ETF product manager with Market Vectors. “The country has a vibrant economy with broad sector representation.”

“In designing the Index, we wanted to set a high bar for inclusion,” said Steven Schoenfeld of BlueStar Global Investors, the index provider. “It was important that each constituent have a deep involvement in Israel’s growth.”

One notable difference between the Israel ETFs is their allocations to top holding Teva Pharmaceutical Industries (NYSE: TEVA).

EIS has 23.5% in the stock, compared with less than 13% for the BlueStar Israel Global Index, the benchmark for ISRA.

According to the BlueStar Israel Global Index’s methodology, no single component stock represents more than 12.5% of the weight of the index. The cumulative weight of all components with an individual weight of 5% or greater do not in the aggregate account for more than 50% of the weight of the index.

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