Videos

Seasoned investment professionals, sector-dedicated analysts, and creative thinkers are at the heart of our business. Get their perspective on today's market climate.

Video Transcript

Israel: Strong Economy Under Allocated by Major Indices


TOM BUTCHER: I'm here with Steven Schoenfeld, Founder of BlueStar Indexes, to talk about Israel. Steven, thanks so much for joining me.


STEVEN SCHOENFELD: Great to be here, Tom.


BUTCHER: Israel's not that large a country. Why should we be caring about it and, in addition, why should an allocation, a dedicated allocation, to Israel be worth talking about?


SCHOENFELD: Even though Israel is a small country geographically, it punches way above its weight in the global markets. If you look at its economy, it is one of the best performing developed markets, compared to all Organization for Economic Co-operation and Development markets. It has very stable macroeconomic policies; a government that is committed to economic reform; a growing population – which is quite rare in developed markets; and it has tailwinds from massive natural gas discoveries. So it is a very interesting economy. Equally important, Israel is home to a number, I would say scores, of world-leading companies, companies that are leaders in their sectors and are changing the world to a positive place.


As far as an allocation, Israel has over the last few years become unintentionally underweight in most investors' portfolios. That is because, when it was an emerging market, it was about 3.5% of the emerging markets universe. It is now less than 0.5% of the developed markets benchmarks. So most global index funds have less than 0.5% in Israeli equities. Many active funds have even less.


So investors should look at the actual opportunities in Israel and say: "Well, maybe we want a broader, deeper allocation." That is what BlueStar Indexes provides. If you use the stocks in our index, the weight in these global indexes would be closer to 1%.


BUTCHER: Going back to sectors, what do you consider to be the most important sectors and those sectors in which Israel leads?


SCHOENFELD: A popular nickname for Israel is the "Startup Nation". Israel, after Silicon Valley, has the most robust technology ecosystem of the world and you have Israeli companies in almost every area of tech that are leaders in their field. Whether it's hardware, software, internet of things, autonomous driving, or, my favorite sector, cyber security and actionable intelligence.


In pharma, Israel is well known for Teva1. But there are many other pharmaceutical, medical technology, and biotech companies in Israel. A company that is very interesting is Mazor Robotics2. It is the world's leader in spine surgery by robotics. This is the kind of technology that comes out of Israel. In addition, as an economy, Israel has financial services, industrial, and even consumer [companies]. Many investors may not know that a major player in the kitchen countertop market in the United States and around the world is Caesarstone3. It is an Israeli company listed here in New York.


BUTCHER: Looking at the market as a whole, how has it performed in the first half of 2017? What sort of exposure should an investor perhaps be considering?


SCHOENFELD: Israel has had a great first half of 2017. The broad index, the BlueStar Israel Global Index, is up about 15.5%. That puts it in the top tier of developed markets. And it has good, long-term history as well.


But we are very excited about the future, given a lot of the strong economic fundamentals. As I said before, Israel's weight in the standard global indexes is below the full weight because those indexes do not include Israeli companies listed worldwide. So if you use the BlueStar Israel Global Index, the weight would be more like 80 or 100 basis points, which would imply a dedicated overweight from a neutral position. And if you are optimistic about Israel, as we are, you might want to put an even higher allocation.



- - - - - - - - - -
IMPORTANT DISCLOSURE


The views and opinions expressed are those of the speaker and are current as of the video's posting date. Video commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions. All performance information is historical and is not a guarantee of future results. For more information about VanEck Funds, VanEck Vectors ETFs or fund performance, visit vaneck.com. Any discussion of specific securities mentioned in the video commentaries is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.


Please note that Van Eck Securities Corporation offers investment products that invest in the asset class(es) included in this video. An investment in the Fund may be subject to risks which include, among others, credit rating downgrades, issuers that may be unable and/or unwilling to make timely interest payments and/or repay the principal on its debt, high yield securities risk, call risk, and interest rate risk, all of which may adversely affect the Fund. International investing involves additional risks which include greater market volatility, the availability of less reliable financial information, higher transactional and custody costs, taxation by foreign governments, decreased market liquidity and political instability. Changes in currency exchange rates may negatively impact the Fund's return. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.


The BlueStar Israel Global Index® is the exclusive property and a trademark of BlueStar Global Investors LLC and has been licensed for use for certain purposes by Van Eck Associates Corporation for VanEck Vectors Israel ETF (the "Fund") based on the BlueStar Israel Global Index®. The Fund is not sponsored, endorsed, sold or promoted by BlueStar Global Investors LLC, and BlueStar Global Investors LLC makes no representation regarding the advisability of trading in the Fund.


Index returns are not Fund returns and do not reflect any management fees or brokerage expenses. Investors cannot invest directly in the Index. Returns for actual Fund investors may differ from what is shown because of differences in timing, the amount invested and fees and expenses. Index returns assume that dividends have been reinvested.


No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Van Eck Securities Corporation. © Van Eck Securities Corporation.


Van Eck Securities Corporation, Distributor
666 Third Avenue, New York, NY 10017