Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation (at no cost to you) when you click on links to those products. Read our Disclaimer Policy for more information.
This article identifies the four best Israel ETFs on the market according to their investment performance, potential, fees, and diversification.
Best Israel ETFs: Brief Background
Warren Buffet believes that Israel is “the leading, largest, and most promising investment hub outside the United States.”
His friend Bill Gates agrees, adding that the “innovation going on in Israel is critical to the future of the technology business.”
The numbers support their claims. After the United States, Israel has the second-largest number of startup companies globally.
It also has the third-largest number of Nasdaq-listed equities, behind the US and China.
Companies like Apple, Microsoft, Google, and Meta built their first overseas research and development facilities in Israel.
Thanks to a handful of ETF providers, it’s never been easier to gain portfolio access to this prospering nation.
Best Israel ETFs: At A Glance
Here are the four best Israeli ETFs according to our research:
- iShares MSCI Israel ETF (EIS)
- ARK Israel Innovative Technology ETF (IZRL)
- BlueStar Israel Technology ETF (ITEQ)
- VanEck Israel ETF (ISRA)
EIS and ISRA provide more diversified exposure, while IZRL and ITEQ focus more on Israeli tech companies.
Let’s further analyze each one of these funds and help you find the right one for your portfolio.
#1. iShares MSCI Israel ETF (EIS)
- 1-Year Performance: +10.69%
- Expense Ratio: 0.57%
- Annual Dividend Yield: 0.15%
- AUM: $194 million
- 3 Month Avg. Volume: 45,258
- Number of Holdings: 113
- Inception Date: 2008
The iShares MSCI Israel ETF provides exposure to a broad range of companies in Israel. It has the most holdings amongst the Israel funds.
It primarily invests in the Information Technology, Financials, Real Estate, and Industrials sectors, representing 31%, 23%, 12%, and 10% of EIS, respectively.
BlackRock offers dozens of international ETFs that enable a country’s portfolio access.
Like EIS, they tend to have the most assets under management, the most years on the market, and the highest expense ratios relative to their peers.
EIS consists mostly of mid-cap equities in the range of $2.7B to $12.9B. About half of the fund’s assets are invested in companies within this range.
The fund allocates an equal amount of assets tosmall-capsand large-caps, each accounting for 25% of EIS.
EIS has been the best performing Israeli ETF over the trailing 12 months – and it’s not even close.
EIS Top Holdings:
- NICE Ltd. (NICE) 7.51%
- Bank Leumi Le-Israel Ltd. (LUMI) 7.45%
- Check Point Software Technologies (CHKP) 6.23%
- Bank Hapoalim BM (POLI) 5.76%
- Teva Pharmaceutical Industries (TEVA) 4.63%
#2. ARK Israel Innovative Technology ETF (IZRL)
- 1-Year Performance: -29.22%
- Expense Ratio: 0.49%
- Annual Dividend Yield: N/A
- AUM: $161 million
- 3 Month Avg. Volume: 74,483
- Number of Holdings: 75
- Inception Date: 2017
The ARK Israel Innovative Technology ETF tracks an index of Israeli companies whose main business operations are causing “disruptive innovation in the areas of genomics, health care, biotechnology, industrials, manufacturing, the Internet, or information technology.”
ARK believes that Israel is an “innovation powerhouse” on the global stage and that many portfolios are underweight Israel relative to its growth and innovation projections.
ARK created IZRL to capture this opportunity. While the firm is known for its suite of active ETFs, this is one of two passive funds offered by ARK Invest – the other being a 3D printing ETF.
The majority of companies in IZRL are mico-, small-, and mid-cap stocks.
Around 75% of holdings have a market cap of less than $2 billion, and only 5% have a market cap above $10 billion.
The majority of these equities exist in the Information Technology (52%), Health Care (21%), and Industrials (13%) sectors.
IZRL is pretty equally-weighted across its 75 holdings.
IZRL Top Holdings:
- Nano Dimension (NNDM) 1.76%
- Gamida Cell (GMDA) 1.76%
- Hilan Ltd. (HLAN) 1.74%
- Partner Communications Co. (PTNR) 1.69%
- Fattal Holdings (1998) (FTAL) 1.67%
#3. BlueStar Israel Technology ETF (ITEQ)
- 1-Year Performance: -30.50%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 0.62%
- AUM: $137 million
- 3 Month Avg. Volume: 71,073
- Number of Holdings: 73
- Inception Date: 2015
The BlueStar Israel Technology ETF (ITEQ) is the first ETF to comprehensively target innovative companies in the Israeli tech industry.
ITEQ provides exposure to the “technology themes of tomorrow” in the areas of cybersecurity, big data hardware and analytics, autonomous driving, artificial intelligence, biotech, cleantech, defense tech, and 3D printing.
ITEQ has a similar objective as the ARK ETF we just covered. Although, there are some differences worth mentioning.
For example, ITEQ’s top sectors include Information Technology (67%), Industrials (8%), and Health Care (7%).
While these categorical definitions can vary from provider to provider, ITEQ is even more invested in the tech-based, growth-oriented Israeli companies than ARK (67% versus 52%).
ITEQ prefers larger companies, too. Most ITEQ equities are of the mid-and large-cap type, while most IZRL equities are of the small- and micro-cap type.
Also, IZRL is 98% invested in Israel-based companies, whereas ITEQ is 70% invested.
The remaining percentages of ITEQ are invested in the United States (19%), Guernsey (5%), Jersey (3%), Gibraltar (1%), and the Caymans (1%).
The last difference we’ll mention is their expense ratios: IZRL collects 0.49% while ITEQ calls for 0.75%. It’s not often that ARK undercuts fees.
ITEQ Top Holdings:
- Check Point Software Technologies (CHKP) 9.82%
- NICE Ltd. (NICE) 7.57%
- Amdocs Limited (DOX) 6.45%
- SolarEdge Technologies (SEDG) 5.95%
- Wix.com (WIX) 4.85%
#4. VanEck Israel ETF (ISRA)
- 1-Year Performance: -8.04%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.15%
- AUM: $72 million
- 3 Month Avg. Volume: 2,875
- Number of Holdings: 112
- Inception Date: 2013
The VanEck Israel ETF seeks to replicate an index’s price and yield performance of 112 Israeli equities.
ISRA has a similar construction as the first Israeli ETF we covered, the iShares MSCI Israel ETF (EIS).
Both are well diversified across most sectors of the economy, have a similar number of holdings primarily invested in mid-and large-cap equities, and charge similar fees.
ISRA is slightly more invested in Information Technology than EIS (40% to 31%) but invests a smaller percentage of the fund’s assets in Israeli-based companies, around 75% compared to 99% from EIS.
Last, ISRA is a much smaller fund than EIS and trades far less in daily volume.
Below is a 1-year trailing performance comparison between the two, where the outperforming blue line represents EIS, and the underperforming yellow line represents ISRA:
We attribute EIS’s outperformance to slight differences in holding selection and geographic weightings.
For example, ISRA’s second-largest holding, a power optimizing company called SolarEdge Technologies, was down 30% last year. This stock is not included in the iShares EIS fund.
A few more instances like this can account for the funds trading in lockstep but to varying degrees.
ISRA Top Holdings:
- Bank Leumi Le-Israel Ltd. (LUMI) 5.73%
- Check Point Software Technologies (CHKP) 5.54%
- NICE Ltd. (NICE) 5.24%
- Bank Hapoalim (POLI) 5.02%
- SolarEdge Technologies (SEDG) 4.56%
Israel ETF Alternatives
One alternative to buying an Israeli exchange-traded fund is to invest in individual Israeli equities.
Most of the primary holdings in these ETFs are US-listed equities, so you shouldn’t have a problem gaining access to them.
We specifically like a handful of Israeli cybersecurity stocks like Check Point Software Technologies (CHKP) and CyberArk (CYBR).
Israel is a global leader in cybersecurity, an industry we believe is positioned for massive growth in the coming years.
Several cybersecurity ETFs provide adequate exposure to this trend, many of which are invested in Israeli equities, too.
Israel ETFs: Frequently Asked Questions
Is there an Israel ETF?
Here are the top Israel ETFs:
- iShares MSCI Israel ETF (EIS)
- ARK Israel Innovative Technology ETF (IZRL)
- BlueStar Israel Technology ETF (ITEQ)
- VanEck Israel ETF (ISRA)
Why does ARK have an Israeli ETF?
ARK believes that many portfolios are underweight Israel relative to the country’s technological capabilities and growth metrics. In 2010, Israel was upgraded from an emerging market to a developed market, excluding traditional MSCIemerging market ETFs. So, Cathie Wood created the ARK Israel Innovative Technology ETF (IZRL) to provide investors with broad-based access to this thriving economy.
How can I invest in the Israel stock market?
You can invest in the Israel stock market by purchasing US-listed Israeli equities, such as Check Point Software (CHKP), NICE (NICE), Israel Chemicals (ICL), SolarEdge (SEDG), or about 80 other names. There are also four US-listed Israel ETFs that provide diversified exposure to the Israel stock market, including EIS, IZRL, ITEQ, and ISA.
Bottom Line: Best Israel ETFs
EIS and ISRA are for investors seeking general exposure to Israel equities. Of the two, we prefer EIS.
IZRL and ITEQ are for investors seeking Israeli tech exposure. We think IZRL is a better product than ITEQ.
Keep Reading:
This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we selected the best Israel ETFs.
