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Author: charliebonds Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Investing in Country Funds? Date: 9/18/2011 3:19 PM
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Take a look at the schedules of holdings for the two country funds there are for Israel. ISL is an actively-managed fund. EIL is a cap-weighted index fund. But would you really want to own either if your intention were to invest broadly in the national economy of Israel? In both cases, as few as five companies represent nearly 50% of the fund’s holdings. Those are very focused bets. Fortunately --and inexplicably so-- there are at least 61 ADRs for Israel, making it very easy to construct one’s own equally-weighted (or fundamentally-weighted, or technically-weighted) country fund.

Whether it would be worth doing so is a whole ‘nother matter. But I’d argue that it might be so, for this reason. The Economist Magazine reports in their recent issue that since the early 90’s correlations between the world’s 23 major markets have increased from the 0.35-0.45 range to the present 0.85-0.95 range. But by my eye from looking at charts, a much-despised, little backwater-country like Israel might offer a cynical chance for diversification and profits. In other words, investing in Israeli stocks might the moral equivalent of investing in the stocks of other repressive, terrorists countries (like N Korea, were their markets open to Western investing). So the decision to invest (or not) can't be made lightly.
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EIS HOLDINGS
Name Wt. Cum.
1 TEVA PHARMACEUTICAL IND LTD 23.51 23.5%
2 ISRAEL CHEMICALS LTD 11.03 34.5%
3 BANK HAPOALIM BM 7.59 42.1%
4 BANK LEUMI LE-ISRAEL 7.49 49.6% <--- a very-focused, 4-stock bet

5 BEZEQ THE ISRAELI TELECOM CO 5.20 54.8%
6 THE ISRAEL CORP LIMITED 3.49 58.3%
7 NICE SYSTEMS LTD 3.29 61.6%
8 ISRAEL DISCOUNT BANK -A 2.37 64.0%
9 MAKHTESHIM-AGAN INDUSTRIES 2.20 66.2%
10 CELLCOM ISRAEL LTD 2.15 68.3%
11 MIZRAHI TEFAHOT BANK LTD 2.07 70.4%
12 PARTNER COMMUNICATIONS CO 1.71 72.1%
13 ELBIT SYSTEMS LTD 1.68 73.8%
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ISL HOLDINGS
Name Wt. Cum.
1 Check Point Software Technologies Limit 13.4% 13.4%
2 Israel Chemicals Limited Chemicals 10.1% 23.5%
3 Mizrahi Tefahot Bank Limited Commercial 9.3% 32.8%
4 Perrigo Co. Pharmaceuticals 8.5% 41.3%
5 Teva Pharmaceutical Industries Limited 8.4% 49.7% <--- a very focused, 5-stock bet

6 Bezeq Israeli Telecommunication Corpces 7.9% 57.6%
7 Bank Leumi Le-Israel Commercial Banks 4.7% 62.3%
8 Shufersal Limited Food & Staples Retail 4.6% 66.9%
9 Frutarom Industries Limited Chemicals 3.8% 70.7%
10 The Israel Corp. Limited Chemicals 3.6% 74.3%

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http://news.bbc.co.uk/2/hi/1721172.stm
http://kiaoragaza.wordpress.com/2011/09/08/turkey-to-sign-mi...
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