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ETF News

MarketsMuse Eye on Israel ETFs $EIS, $ISRA: Not Just Chopped Liver

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MarketsMuse.com ETF update is courtesy of extract from 15 April Zacks.com article published at SeekingAlpha.com

Despite endless economic and financial woes, as well as geopolitical tensions in the Middle East, Israeli stocks have been on the rise and are clearly outperforming its neighboring countries and the broad world market.

This is particularly true given that the iShares MSCI Israel Capped ETF (NYSEARCA:EIS) and the Market Vectors Israel ETF (NYSEARCA:ISRA) have gained in double digits so far this year. This is compared to the gains of 3.9% for WisdomTree Middle East Dividend ETF (NASDAQ:GULF), 6.3% for the SPDR S&P Emerging Middle East & Africa ETF (NYSEARCA:GAF), 5.2% for the iShares MSCI ACWI Index ETF (NASDAQ:ACWI) and 2.6% for the SPDR S&P 500 Trust ETF (NYSEARCA:SPY).

The strong gains came from the easing policies adopted by the Bank of Israel (BOI) to guard against the recent appreciation of the shekel and pull the country out of deflation. The BOI surprisingly reduced its interest rate by 15 bps to a record low of 0.10% in February that will likely boost economic growth and the inflation rate to 1-3% within a year, while maintaining financial stability. The bank could introduce further measures, matching Europe to stimulate growth in the economy, if required.

Israel remains one of the stable countries in the Middle East amid endless territorial disputes and security concerns. The country’s economy has proven to be quite resilient and strong compared to those of its neighboring nations. Israel is the dominant leader in technological innovation, which is pulling solid capital into the country. Continue reading →

ETF News

ETF Branding: What’s In The Name Might Not Be in the Index

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Courtesy of Karen Damato, WSJ Reporter

Most ETF names appear to leave little to the imagination. They seem to describe what the fund is all about.wsjlogo

But beware: Sometimes you can’t judge an ETF by its cover.

A “Middle East & Africa” fund with only 5% of assets in the Middle East? A “BRIC” fund—you know, for Brazil, Russia, India and China—that has just 2% of its assets in Russia? A “homebuilders” fund that has only 26% of its assets in companies that build homes?

Yes, that’s right.

In many cases, the ETFs are simply aping the names of the indexes they track, so the issue is more one of index composition than duplicitous marketing. But “a misleading name is a misleading name,” says Robert Goldsborough, an ETF analyst with investment researcher Morningstar Inc. And “the first thing anyone sees about an ETF is the name.”

ETF sponsor State Street Global Advisors, a unit of State Street Corp., recently noted in an online checklist designed to help investors analyze ETFs that “many ETFs belie their name.” Thus, “it’s necessary to look beyond the fund’s name or the index it tracks” to analyze the underlying holdings.

Some questionable names are found in State Street’s own lineup, researchers say. IndexUniverse points to SPDR S&P Emerging Middle East & Africa, GAF -1.89% an $88 million ETF that recently had 91% of its assets in South Africa, 4% in Morocco and—for its Middle East exposure—5% in Egypt. Egypt is the only Middle East country that Standard & Poor’s classifies as an “emerging” economy.

Mr. Goldsborough takes issue with State Street’s $2.2 billion SPDR S&P Homebuilders XHB +0.15% . It recently had 74% of assets in companies that are related to but not directly engaged in home building, such as top holdings Whirlpool Corp. and Lowe’s Cos.

A State Street spokeswoman didn’t respond to requests for comment. Continue reading →