The value of the First Israel Fund (ISL) – a stock traded on the New York Stock Exchange – has climbed almost 50 percent this year.
Meanwhile, iShares Israel (EIS), an Exchange Traded Fund, has climbed 61 percent.
iShares Israel, an index fund traded as a stock, follows the Morgan Stanley Israel Capped Investable Market Index. Recent price: $53.24. It was launched in March 2008.
Both iShares Israel and First Israel were called bargains by SmartMoney magazine in November. iShares Israel has lower expenses, 0.63 percent versus 1.7 percent, but Don Dion, an analyst, claims that iShares Israel “struggles” with diversification problems. Recently it had 22 percent of its portfolio in just one stock, Teva. For information, call (800) 474-2737.
First Israel recently traded on the New York Stock Exchange at $15.04. It was launched by Credit Suisse Asset Management in 1990, and is headquartered in Philadelphia. Its phone number is (866) 839-5205.
First Israel is a “closed-end fund,” not the typical “open end” mutual fund. Unlike an Exchange Traded Fund, a closed-end fund may be actively managed: The managers can change their portfolio.
Buyers and sellers of a closed-end fund trade among themselves, not through a fund company. One result is that the price of the fund may be less than its individual holdings are worth – it may be trading at a discount. Recently First Israel’s discount was 7 percent. This isn’t necessarily a benefit; a shareholder may wind up selling the fund at the same or even a larger discount.
An advantage that a closed-end fund has is that the managers need not sell their holdings, perhaps at the wrong time, to raise cash when many shareholders decide to sell.
The fund’s 10 largest holdings recently, their industry, and the percentage of fund assets they constituted in the fund, were:
1. Teva Pharmaceutical Industries Ltd. Pharmaceuticals 9.3 percent
2. Bezeq Israeli Telecommunication Corporation Ltd. Diversified Telecommunication Services 8.8 percent
3. Harel Insurance Investments Ltd. Insurance 7.1 percent
4. Bank Leumi Le-Israel Ltd. Commercial Banks 6.4 percent
5. Bank Hapoalim Ltd. Commercial Banks 6.1 percent
6. Israel Chemicals Ltd. Chemicals 5.5 percent
7. Perrigo Co. Pharmaceuticals 4.0 percent
8. Walden-Israel Ventures III, L.P. Venture Capital 2.8 percent
9. SVE Star Ventures Enterprises GmbH& Co. No. IX KG Venture Capital 2.5 percent
10. BPA Israel Ventures LLC Venture Capital 2.4 percent