New ETF Offers Investors Exposure to Israeli Tech Stocks
There's a new ETF you can buy that tracks some of the most essential technology companies in the world that you've never heard of.
Did you know that your car's safety systems depend on Israeli technology? (Moblieye.) Did you know that more than 50% of the world's 3D printers depend on Israeli technology? (Stratays.) Did you know that Israeli technology keeps your data safe from hackers? (Checkpoint, Cyberark, Imperva, Radware.) Did you know that your mobile phone calls sound better because of Israeli technology? (DSP Group.) Did you know that the screens on your TVs, laptops and mobile phones depend on Israeli technology? (Orbotech.)
Israel has historically been one of the world's leaders in research and development -- a trait that has allowed the small country of eight million people to remain globally competitive despite its geopolitical challenges.
The country is ranked first in the world for the percent of GDP spent on research and development, first in start-ups per capita and receives the third largest amount of venture capital financing globally. Israel also boasts the highest concentration of high-tech firms outside the U.S. and is home to more than 60 research and development centers for multinational giants like Intel, Google, Deutsche Telekom, Microsoft and Apple.
The Israeli economy is forecast to grow by more than 3% in 2015, one of the highest developed market growth rates in the OECD. Innovative technology firms have largely driven global growth over the past two decades and Israel's robust technology sector is expected to account for at least one-third of this growth.
While Israel is a dominant leader in the high tech industry, given the country's low weight in global indexes, many of Israel's cutting-edge stocks are often a key missing component of technology equity exposure worldwide. This is because Israel has comprised only a small part of major developed markets benchmarks like MSCI EAFE and FTSE Developed World ex-U.S. following the decision in 2009 and 2010 by major index providers to graduate Israel to developed market status from the emerging markets category.
There's a new ETF now that captures these companies: the BlueStar TA-BIGITech Israel Technology ETF (ITEQ) - Get Report , which launched this week (disclosure: I am chief investment officer at BlueStar Indexes, which produces the benchmark index for the ETF). Many of these companies were previously overlooked in well-known developed market benchmarks, in major global Tech benchmarks, in the ETFs that track these indexes, and the portfolios of active managers benchmarked to standard developed market indexes.
Here is how the index is weighted:
I am chief investment officer at BlueStar Indexes, the company that produces the benchmark index for the ETF.