The iShares MSCI Israel Capped Investable Market Index Fund ( EIS - Get Report) gives investors exposure to the highest concentration of engineers in the world and more scientists per capita than any other developed country.

Israel "is similar to a western democracy," said Jamia Jasper, portfolio manager of the American Israeli Shared Values Fund. "It has one of the most highly educated workforces in the world."

EIS is dominated by health care, materials, financials and information technology. It has $205 million in assets spread across 70 equity holdings with a broad range of market capitalizations including TEVA Pharmaceuticals ( TEVA - Get Report), Check Point Software Technologies ( CHKP - Get Report), Elbit Systems ( ESLT - Get Report) and Partner Communications ( PTNR - Get Report).

EIS has fallen 16% since its inception this past spring. Taking a look at Israel as a whole, the Tel Aviv Stock Exchange has dropped 35% so far this year. This downswing has been similar to that of other global exchanges. Year to date, the S&P 500 has declined 18%, while the FTSE 100 has slumped 19%.

A dip in price might make for an ideal time to buy into Israel. "Israel is going to help you diversify your portfolio on a global basis," Jasper said. "The country doesn't have a subprime crisis like the U.S. They have much tighter lending standards."

Cliff Goldstein, portfolio manager of the AMIDEX35 Israel A Fund ( AMDAX - Get Report), is also bullish on the big picture for Israel. "The country's macroeconomic environment coupled with its legendary track record of innovation make it one of the most attractive markets in the world," he said."Business in Israel is brisk. There is less government spending, lower unemployment and more exports than most other countries."

Goldstein said he's been favoring banks, insurance companies, retailers and chemicals firms.

His top holding as of June 30 was Israel Chemicals. The fertilizer and specialty chemical company is coming off of a quarter in which its operating income soared fivefold as sales more than doubled. Israel Chemicals has benefitted from a surging, global demand for phosphates and potash. The company also maintains a well-balanced product mix.

Investing in Israel does not come without risk. "Geopolitical risk is often associated with Israel," Jasper said. "But it is already priced into the market. Israel has always been resilient in the face of geopolitical risk."

Jasper cites the 2006 Lebanon War as a prime example of this resilience. During the conflict in the summer of 2006, the Tel Aviv Stock Exchange declined by 3.8%. From early September till the end of the year, the exchange rose 16% and added another 23% in 2007.

The weighting of the 70 holdings of EIS are not as evenly balanced as those of a typical mutual fund. TEVA and Israel Chemicals, the top two holdings, account for 37% of the ETF. So a downturn for either could drag down EIS more so than would be the case with a mutual fund.