Getting single-country exposure in developed markets will depend heavily on an investor’s own due diligence, especially with the coronavirus in the mix. With 2021 on the horizon, some countries are looking to beat gross domestic product (GDP) forecasts, such as Israel and the the VanEck Vectors Israel ETF (ISRA).

The Times of Israel noted that the Organisation for Economic Co-operation and Development (OECD) “is projecting Israel’s economy will grow a mere 2.3% in 2021, below the global average, after contracting 4.2% this year, as increased unemployment and a likely rise in insolvencies after a second national lockdown ‘will weigh’ on economic recovery.” The global deployment of a vaccine could certainly help the case for Israel beating the OECD’s GDP projections and ISRA may present an attractive value option.

As for the fund, ISRA seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the BlueStar Israel Global Index®. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.

The index is comprised of equity securities, which may include depositary receipts of publicly traded organizations that are considered to be Israeli companies. It may also utilize depositary receipts to seek performance that corresponds to the fund’s benchmark index.

ISRA gives investors exposure to:

  • A Stable, Growing, and Resilient Economy: Exposure to a vibrant economy that has historically demonstrated consistent GDP growth despite regional geopolitical events.
  • A Multi-Sector Economy: The index offers broad sector exposure to Israel’s vibrant economy, including information technology, health care, and financials.
  • Israeli Companies Globally: The underlying index offers a broad and diversified reflection of Israel’s globally-oriented economy.

 

Despite the OECD’s projections, ISRA has been performing well. The fund is up about 24% thus far this year:

ISRA Chart

A Modest Recovery Underway

As mentioned, a deployment of a global vaccine can certainly feed into more strength for Israel and subsequently, ISRA. Capital investment can provide added tailwinds for the country’s economic condition.

“The projections assume a more gradual exit from the second lockdown compared to the first one,” the OECD said in its December 2020 Economic Outlook report. “GDP will recover only modestly by 2.3% in 2021 before expanding by 4.2% in 2022 as an effective vaccine is rolled out. High uncertainty, increasing unemployment in the near term, and a likely rise in insolvencies once government support is withdrawn will weigh on consumer demand and investment.”

“Boosting investment in infrastructure and pre-school education can strengthen the recovery and help reduce socio-economic disparities,” the report said.

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