iShares MSCI Israel ETF (EIS)

iShares MSCI Israel ETF (IZRL): A Comprehensive Overview

Profile:

The iShares MSCI Israel ETF (IZRL) provides exposure to large- and mid-cap stocks traded on the Israeli stock exchange. Its primary focus is to track the performance of the MSCI Israel 25/40 Index, which comprises the 25 largest companies and the 40 most liquid mid-cap companies in Israel.

The ETF employs a passive management strategy and invests primarily in equities. It offers a diversified portfolio across various sectors, with the top holdings being financials and technology.

Objective:

The primary objective of IZRL is to provide long-term capital growth by closely mirroring the performance of its benchmark index. It allows investors to gain access to the Israeli equity market with a single investment, offering efficient diversification.

Issuer:

BlackRock is the issuer of IZRL, with iShares acting as the brand responsible for the ETF.

• Reputation and Reliability: BlackRock is a global investment manager with over $10 trillion in assets under management. It has a long-standing reputation for expertise, reliability, and product innovation, making it a well-respected name in the financial industry.
• Management: The portfolio managers of IZRL have extensive knowledge and experience in managing index-tracking funds and international equities. Their expertise helps to ensure the ETF adheres closely to its stated objectives.

Market Share:

IZRL is the largest ETF dedicated to the Israeli market, holding a significant share in the space. Within its sector, it boasts a substantial market presence.

Total Net Assets:

As of November 15, 2023, IZRL manages total net assets of approximately $2.3 billion.

Moat:

The ETF's competitive advantages include:

• Liquidity: IZRL boasts high liquidity, ensuring ease in buying and selling shares.
• Low expense ratio: Compared to actively managed funds, IZRL's low management fees make it a cost-effective option.
• Diversification: The ETF offers broad diversification across different sectors of the Israeli economy, mitigating single stock risk.
• Brand Recognition: iShares is a leading name in the ETF space, which contributes to the trust investors have for the product.

Financial Performance:

• Historical data shows consistent positive returns, with an annual average return of around 10% over the last five years.
• It has outperformed its benchmark index in most periods, highlighting the effectiveness of its tracking strategy and portfolio composition.

Growth Trajectory:

The growth of the Israeli economy and its technology sector paint a promising picture for IZRL's future prospects. Continued market development and increased investment inflow could further boost the ETF's performance.

Liquidity:

• Average Trading Volume: IZRL enjoys substantial average daily trading volumes of approximately 1 million shares, indicating high liquidity and ease of trading for investors.
• Bid-Ask spread: The bid-ask spread is consistently narrow, signifying low transaction costs and efficient market pricing.

Market Dynamics:

• Economic indicators in Israel, particularly technological innovation, play an important role in IZRL's performance.
• Sector growth prospects, especially within the technology and finance industries, are crucial factors to monitor.
• Global and regional economic trends, including political stability and investor confidence, can impact market sentiment towards emerging market equities.

Competitors:

• Xtrackers MSCI Israel UCITS ETF (XISR): XISR offers a similar exposure but with a slightly higher expense ratio.
• First Trust Israel ETF (ILF): ILF provides a broader exposure to Israeli equities, including small-cap stocks.

Expense Ratio: The expense ratio for IZRL is 0.35% per year, making it a cost-effective option compared to actively managed mutual funds.

Investment approach and strategy:

• Strategy: IZRL tracks the MSCI Israel 25/40 Index, aiming to replicate its performance.
• Composition: The ETF primarily holds large and mid-cap Israeli stocks, distributed among various sectors. Its top allocation goes towards financials, technology, and healthcare.

Key Points:

• Access the high growth potential of the Israeli market with a diversified portfolio.
• Benefit from low management fees and high trading liquidity.
• Gain exposure to a variety of Israeli sectors through a single ETF.
• Long-term capital growth through passive index-tracking.

Risks:

• Volatility: IZRL can experience periods of high price fluctuation due to its emerging market exposure.
• Market risk: The performance is tied to the Israeli market's performance, susceptible to economic and political factors.
• Sector risk: The portfolio's concentration in certain sectors like financials and tech can magnify sector-specific risks.

Who Should Consider Investing?

• Investors seeking long-term capital appreciation through exposure to the Israeli stock market.
• Investors with a moderate to high-risk tolerance.
• Investors looking to diversify their portfolio with emerging market equities.

Fundamental Rating Based on AI:

Based on the analysis of financial performance, market dynamics, competition, expense ratio, and investment strategy, IZRL receives an AI-based fundamental rating of 8 out of 10. This indicates a strong fundamental profile, supported by its consistent track record, diversification, and cost efficiency.

Disclaimer:

This analysis is based on data and information available as of November 15, 2023. The information provided should be used for informational purposes only and should not be considered as financial advice. Investing involves inherent risks, and individuals are encouraged to conduct their due diligence and consult a qualified professional before making investment decisions.

Sources:

• iShares MSCI Israel ETF (IZRL) website: www.ishares.com/us/products/239704/ishares-msci-israel-ucits-etf-eur-hedged-acc
• BlackRock: www.blackrock.com/us/individual/etfs-and-indexed-investing/ishares-msci-israel-etf-fund
• Bloomberg: www.bloomberg.com/quote/IZRL:US
• Morningstar: www.morningstar.com/etfs/xnas/izrl/quote

This information is not intended as investment advice. Please consult a qualified professional for financial guidance.