NEW YORK ( TheStreet) -- When you think of strong economies, China and India probably come to mind.

But how about Israel?

This nation's economy fared better during the global recession than most other developed countries. Its GDP decreased by only 0.3% in 2009, compared with a drop of 2.4% in the U.S. and a decline of 4.0% in the European Union.

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The iShares MSCI Israel Capped Investable Market Index Fund ( EIS) is the way for investors to play Israel's robust economy.

Israel emerged relatively unscathed from the global financial crisis because of strict lending standards that helped it avoid much of the subprime mortgage issues that confronted other countries.

Israelis also have a higher saving rate than most Americans. Lower consumer debt levels helped the country avoid a drop in personal consumption when the worldwide decrease in economic activity constrained personal incomes.

There are also multiple signals that Israel's economy is on track to continue recovering at a faster pace than its Western peers.

For one, Israel's housing market is not as distressed as those in other parts of the world. Home prices increased in value in the fourth quarter of 2009 from a year earlier, whereas in most countries, they were still dropping or rising anemically.

Also, consumer confidence has risen to a 10-year high through February, signaling that domestic consumption will strengthen.

Israel's economy is also very involved in exports, which have continued to increase even as the nation's currency rose against the dollar over much of the past year. Its export market is highly developed, featuring internationally competitive companies in the high-technology and biotech sectors.

Despite the developed nature of Israel's economy, EIS has been able to almost keep pace with or outperform the ETFs that track hot emerging economies such as China and India. In 2009, EIS rose 81.2%, while WisdomTree India Earnings ( EPI) went up 95.1% and the iShares FTSE/Xinhua China 25 Index ( FXI) gained 47.3%.

EIS allocates the most net assets to biotechnology company Teva Pharmaceutical ( TEVA), which accounts for 24% of the ETF. Another large holding is Checkpoint Software Technologies ( CHKP), an information technology security company, which accounts for 7.5% of the fund.

Bank Hapoalim, which reported strong earnings Wednesday, is also a top 10 holding, accounting for 4.8% of the fund. Overall, the financial sector receives 24.2% of net assets.

The third largest sector allocation, behind financials and health care, is materials, accounting for a 13.6% wedge of EIS.

Telecom companies Cellcom Israel ( CEL) and Partner Communications ( PTNR) receive 2.2% and 3.2% allocations, respectively, while, telecommunication services has the fourth most prominent sector allocation, accounting for 10.6%.

In total, the fund holds 81 companies and is well balanced aside from the large allocation to Teva. EIS has an expense ratio of 0.66% and daily average volume of about 75,000 shares, a healthy number.

The bottom line is that EIS exhibits emerging market performance while tracking a developed economy with a positive outlook. That makes it an attractive international play right now.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion owned EIS.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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