Market Vectors, Van Eck Global's exchange-traded fund unit, on
Wednesday is launching an equities ETF focused on Israel, taking on
the only other fund targeting Israel through an index methodology
that will make the new ETF more diversified than iShares'
The Market Vectors Israel ETF will trade under the symbol "ISRA"
and will have a net annual expense ratio-including a fee waiver-of
0.59 percent, or $59 for each $10,000 invested, according to
the filing. The fund will be based on an index created by
BlueStar Indexes, a firm founded by longtime index industry figure
ISRA will join the iShares MSCI Israel Capped Investable Market
Index Fund (NYSEArca:EIS), a five-year-old ETF that now has $77
million in assets. EIS has an annual expense ratio of around 0.60
percent, according to iShares' website.
ISRA is designed to take on inherent weaknesses in EIS' index
methodology by including Israeli companies that are listed outside
of Israel-a feature that avoids the top-heavy quality of the MSCI
index methodology. No single holding of ISRA can be more than 12.5
percent of the portfolio; that's half the 25 percent maximum
of EIS, a feature that will make ISRA more diversified and less
subject to single-security risk.
A Dynamic, If Dangerous, Neighborhood
While investing in Israel may give investors pause, the Middle
Eastern country has long had a reputation of economic dynamism and
capitalist success that belies the turmoil it sometimes finds
itself embroiled in.
The fund's latest prospectus took some of those concerns head-on
in the section on unique risks the fund poses to investors.
"Israel's relations with the Palestinian Authority and certain
neighboring countries such as Lebanon, Syria and Iran, among
others, have at times been strained due to territorial disputes,
historical animosities or security concerns, which may cause
uncertainty in the Israeli markets and adversely affect the overall
economy, " the prospectus said.
The filing also said that Israel's economy depends on imports of
certain key items, such as crude oil, coal, grains, raw materials
and military equipment. Furthermore, Israel's economy is heavily
dependent upon trade relationships with key counterparties around
"Any reduction in these trade flows may have an adverse impact
on the fund's investments," the filing said.
ISRA's index provider will consider factors such as domicile,
country of company formation/founding, primary location of
management, operations and/or research and development facilities,
tax status, location of revenues and employees to determine whether
a company will be included in the index.
The fund's investments will include depositary receipts, and as
of March 1, 2013, the index included 94 securities of companies
with a market capitalization range of between approximately $133
million and $35.1 billion, and an average market capitalization of
At least 80 percent of the fund's assets will normally be
invested in the index-a policy that is nonfundamental and may be
changed without shareholder approval upon 60 days' prior written
notice to shareholders, according to the filing.
Permalink | 'copy; Copyright 2009 IndexUniverse LLC. All rights
Don't forget to check IndexUniverse.com's ETF Data
2013 IndexUniverse LLC
. All Rights Reserved.