Jewish and Israel ETFs: How To Invest in Line With Jewish Values

Religion-themed funds are on the rise, including numerous Catholic and Sharia ETFs. If you are interested in investing along with Jewish values, you also have several options. Keep reading to learn more.

SustainFi   Updated March 9th, 2022

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How to invest in line with Jewish values

Faith-based investing is supposed to let you reconcile your religious beliefs and competitive financial returns. Faith-based funds, a subset of environmental, social, and governance (ESG) funds, are seeing tremendous growth as investors emphasize meaning and social responsibility.

Catholic investors in the U.S. can buy one of many funds that invest along with the principles established by the U.S. Conference of Catholic Bishops. Biblically Responsible funds avoid companies engaged in stem cell research or adult entertainment.

Likewise, Muslims can invest in funds that screen stocks based on criteria set by Islamic finance consultants or the Accounting and Auditing Organization for Islamic Financial Institutions. Sharia ETFs don’t invest in alcohol, pork processing, gambling, or financial institutions.

Unfortunately, there are no Jewish values-based ETFs on the U.S. market today. This presents an opportunity for asset managers to launch a Jewish-themed fund. In the meantime, you can work around this by investing in Israel-themed funds. There are currently four Israel ETFs on the market, all of them easily available to U.S. investors.

Besides, there are many non-religious reasons to invest in Israel ETFs. The Bloomberg Innovation Index named Israel the world’s sixth most innovative country in 2020. Israel also ranks within the world’s most competitive and dynamic economies. According to the Global Competitiveness Index, Israel is number one for “growth of innovative companies” as well as for “R&D expenditures as a percentage of GDP.”

How have Israel ETFs performed?

The oldest Israel ETF, the iShares MSCI Israel ETF (EIS), has been around for nearly 15 years. This diversified fund has outperformed the Morningstar Global Markets ex-U.S. Index over the fund’s entire history as well as in 2021, over the past three years and the past five years. So investing in the Israeli economy would have been a wise money decision, not just a value or political statement.

The top Jewish / Israel funds

Israel / Jewish ETF list

  • iShares MSCI Israel ETF (EIS)
  • ARK Israel Innovative Technology ETF (IZRL)
  • BlueStar Israel Technology ETF (ITEQ)
  • VanEck Israel ETF (ISRA)

Here is how the Israel-focused ETFs stack up.

FundTickerExpense RatioAssets ($m)2021 Return
iShares MSCI Israel ETFEIS
ARK Israel Innovative Technology ETFIZRL0.49%154-4%
BlueStar Israel Technology ETFITEQ0.75%139-8%
VanEck Israel ETFISRA0.62%7210%

Learn more about each fund.

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iShares MSCI Israel ETF (EIS)

  • Expense ratio: 0.57%
  • Best for: diversified exposure to Israeli companies

Launched back in 2008, the iShares MSCI Israel ETF (EIS) was the first Israel-themed fund on the market. It invests in around 100 Israeli companies, with each holding capped at 25% of the fund.

The top three holdings are cybersecurity company Check Point Software, Bank Leumi Le Israel, and Nice Ltd, which makes customer experience software. Unsurprisingly, tech is the largest industry and nearly a third of the fund. EIS also has big holdings in financials and real estate.

However, if you are a values-based investor, you may be concerned about some of the fund’s investments. According to MSCI, an ESG rating agency, almost 3% of the fund is invested in controversial weapons. The fund owns Elbit Systems, a defense and homeland security company. This is a common holding across Israel funds at this time.

EIS costs 0.57% annually.

ARK Israel Innovative Technology ETF (IZRL)

  • Expense ratio: exposure to disruptive Israeli companies
  • Best for: 0.49%

Cathie Woods’ ARK Invest is best known for its flagship ARK Innovation ETF (ARKK), though the ETF manager has launched many other funds, including an ESG ETF.

The ARK Israel Innovative Technology ETF (IZRL) seeks to invest in disruptive Israeli companies in sectors like genomics, health care, biotech, and technology. To be included, companies must be incorporated or domiciled in Israel.

IZRL has around 70 holdings, all equally weighted, giving you exposure to many smaller stocks. Unsurprisingly, almost 50% of the fund is in tech. Healthcare is the second-largest sector.

IZRL is the cheapest fund on the list – it costs only 0.49% annually.

BlueStar Israel Technology ETF (ITEQ)

  • Expense ratio: 0.75%
  • Best for: exposure to Israeli tech stocks

Launched in 2015, the BlueStar Israel Technology ETF (ITEQ) invests in Israeli technology companies listed globally. To be included, companies don’t have to be listed or even headquartered in Israel, but they must have at least 20% of employees or assets or a major R&D center in Israel. The fund also considers where the company is incorporated and where the management team sits.

The ETF provides exposure to disruptive industries like cyber security, autonomous driving, clean energy, biotechnology, medtech, cleantech, and more. ITEQ has around 70 holdings, including the top three Check Point Software, a cybersecurity company, solar stock SolarEdge, and Nice Ltd, a provider of customer security software.

Despite a common theme, ITEQ and IZRL don’t have many overlapping holdings.

The fund costs 0.75% annually.

VanEck Israel ETF (ISRA)

  • Expense ratio: 0.62%

The VanEck Israel ETF (ISRA) invests in Israeli companies regardless of where they are listed. Just like ITEQ, ISRA relies on BlueStar, an index provider, to determine which companies should be considered Israeli. BlueStar takes into account the location of the headquarters, incorporation, assets in Israel, employees in Israel, R&D facilities, and other factors.

The fund has around 100 holdings, including the top three Check Point Software, SolarEdge, and Bank Leumi Le Israel. Most of the holdings overlap with the iShares MSCI Israel ETF (EIS). EIS is a bigger fund that also costs a little bit less (0.57% vs. 0.62% for ISRA.) However, ISRA owns more tech stocks relative to EIS.

💰 Which Israel ETF is best?

  • Each of the four Israel ETFs has a different angle. The largest Israel ETF, EIS, is a diversified fund that lets you invest in Israeli stocks, from cybersecurity to banks. In contrast, funds like IZRL and ITEQ focus on disruptive stocks in tech and other sectors

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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