Israeli Companies Reach Wall Street: The Fund That Will Change the Game
A new ETF launched on NASDAQ gives investors in the US exposure to 120 leading companies on the Tel Aviv Stock Exchange, from banks to defense and technology companies, and what this means for those companies.
Israeli companies are now gaining new access to American investors, after the ETF company Defiance launched a new ETF on the NASDAQ exchange under the ticker ISRL. The fund is designed to allow investors in the US to gain direct exposure to 120 of the leading companies traded on the Tel Aviv Stock Exchange.
The move may change the way American investors are exposed to the Israeli market. Until today, those who sought to invest in Israel through Wall Street focused largely on Israeli technology companies traded in the US. The new fund offers broader access to the local economy through exposure to a variety of sectors.
ISRL tracks the Index 120, which includes large companies from fields such as banking, insurance, real estate, energy, defense industries, healthcare, and technology. Thus, the fund does not focus on a single sector, but seeks to reflect broad parts of business activity in Israel.
One of the main advantages for the American investor is simplicity. The fund's units are traded on NASDAQ in dollars, similar to trading American stocks, while the fund managers are the ones who carry out the investments in stocks traded in Tel Aviv. This saves the investor some of the barriers involved in direct trading on a foreign stock exchange.
The launch is the result of a collaboration between Defiance, the index company Index from the TMX VettaFi Global group, and the investment house Kessem from the Phoenix group.
For the Tel Aviv Stock Exchange, this is a move that may have broad significance. As the fund attracts capital from American investors, the demand for the stocks included in the index may increase, and accordingly, their trading volumes and liquidity.
Beyond that, the new product may expand international exposure to Israeli companies that are not traded on Wall Street. Banks, insurance companies, real estate companies, and defense industries will be able to gain indirect exposure to American investors, even without an independent listing on the American stock exchange.
The launch may also help reduce possible pricing gaps between Israeli companies and similar companies in international markets, if demand from foreign investors increases. At the same time, it signals an attempt to create a more direct financial bridge between the Israeli capital market and one of the central capital markets in the world.
