Still undiscovered by some U.S. investors, Israel is home to one of the world's most advanced technology sectors and one of the most vibrant start-up scenes. In recent years, Israeli tech start-ups have been attractive takeover targets while larger, more mature Israeli tech firms now populate an array of popular U.S.-listed ETFs.
Investors now have a new avenue for tapping into the Israeli tech boom with the BlueStar TA-BIGITech Israel Technology ETF (NASDAQ: ITEQ), which debuted Tuesday. The new ETF is the first dedicated exclusively to Israeli tech stocks and tracks the TASE-BlueStar Israel Global Technology Index (TA-BIGITech), the first and only benchmark following a broad, deep and complete range of major Israeli tech companies listed on five exchanges worldwide (TASE, NASDAQ, NYSE, London Stock Exchange and the Singapore Exchange), according to a statement.
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BlueStar is also the index provider for the Israel ETF, Market Vectors ETF Trust (NYSE:ISRA), the tech-heavy of the two previously existing Israel-specific ETFs. ISRA allocates about a third of its weight to the tech sector.
TA-BIGITech is comprised of 65 stocks of Israeli high-tech companies working in information technology, cybersecurity, clean and renewable energy, biotechnology, sustainable agriculture, and defense technology. These companies have minimal overlap with technology indexes and ETFs currently listed in the U.S, said New York-based BlueStar in the statement.
Index Allocations And Holdings
As of the end of the third quarter, 39 percent of the TA-BIGITech Index was allocated to software companies, with another 14 percent devoted to providers of I.T. services, according to index provider data.
Seven of the index's top 10 holdings are U.S.-listed companies, including Amdocs Limited (NASDAQ:DOX), Check Point Software Technologies Ltd. (NASDAQ:CHKP) and Mobileye NV (NYSE:MBLY).
The index is not confined to tech stocks, as it can hold biotech, agriculture technology and defense companies as well as mid- and small-cap stocks.
The Israeli economy is forecast to grow by more than 3 percent in 2015, one of the highest developed market growth rates in the OECD, and Israels robust technology sector is expected to account for at least one-third of this growth, said BlueStar in the statement.
A devoted Israeli tech ETF makes sense because, following the 2009 decision by some index providers to elevate Israel to developed market status from the emerging markets classification, the country has become just a small part of major developed markets benchmarks. That means some of the major Israeli tech companies, such as those held by the BlueStar TA-BIGITech Israel Technology ETF, are being are overlooked in well-known, diversified developed markets ETFs.
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