BlueStar Global Investments, a research-focused firm specialising in the Israeli capital markets, has constructed a sector-specific index which is the engine behind a recently launched exchange-traded fund that invests in Israeli companies operating in the technology sector. The BlueStar TA-BIGITech Israel Technology ETF (Nasdaq: ITEQ) tracks the TASE-BlueStar Israel Global Technology Index, providing access to a highly diversified benchmark of innovative firms with a global operational reach.
Steven Schoenfeld, Founder and Chief Investment Officer of BlueStar.
Steven Schoenfeld, Founder and Chief Investment Officer of BlueStar, commented: “We are pleased to launch this unique ETF which, for the first time, provides investors with an efficient way to tap into the dynamic, innovative, and global Israeli technology sector. We are optimistic that investors worldwide will find the ITEQ ETF a unique potential addition to their portfolio.”
The index’s methodology specifies that potential constituents be headquartered in Israel but allows the inclusion of firm’s that may have listed shares on international exchanges for strategic purposes. The methodology applies a broad definition to technology stocks, including not only information technology, but also bio-technology, agri-technology and defense-technology. Investment in the ETF therefore provides exposure to event-driven news and growth trends in areas such as IT and hardware, cybersecurity, pharmaceuticals, aerospace, big data, sustainable agriculture, genetics, renewable energy and weapons technology.
Israel has historically been one of the world’s leaders in research and development; a trait that has allowed it to remain economically competitive globally despite its geopolitical instability. The country is ranked first in the world for number of start-up businesses per capita and receives the third largest amount of venture capital financing globally. The country also boasts the second highest concentration of high-tech firms (after the US) and is home to more than 60 research and development centres for foreign multi-national companies such as Google, Deutsch Telekom, and Microsoft. Annually, more than 5% of GDP is spent on research and development.
As of 30 September 2015 the index contained 65 securities of which the largest exposures were to Amdocs (12.0%), Check Point Software (11.2%), Mobileye (10.8%), Verint Systems (5.0%) and Nice Systems (4.4%).
The fund may be ideal for investors wishing to incorporate the event-driven, dynamic profile of the technology sector as a part of their existing portfolios. Due to differences in operations between those firms listed on ITEQ and those constituting other US-listed technology ETFs, investors may wish to combine ITEQ with existing technology-based ETFs to further diversify that segment of their portfolio.
The fund is the product of a collaboration between Factor Advisors, a subsidiary of ETF Managers Group, and ITEQ ETF Partners, an affiliate of BlueStar Global Investors.
Sam Masucci, founder and CEO of ETF Managers Group said: “We are excited to be involved in the launch of the ITEQ ETF, bringing unrivaled exposure to the worldwide Israeli Technology sector. ITEQ delivers a uniquely diversified investment opportunity and enhances the ETF Managers Group growing family of products.”
The fund has a net expense ratio of 0.75%.