The stalwart Dow Jones Industrial Avarage is finding its way into Israel in the form of a new ETF
Dow Jones Indexes has licensed the Dow Jones Industrial Average to investment manager Excellence Nessuah to issue an exchange-traded fund in Israel.
The product will be issued by Excellence Nessuah's KSM Financial Products subsidiary (KSM being the Hebrew acronym for 'tradable index fund"). The KSM DJIA will be listed on the Tel Aviv Stock Exchange (TASE), which has seen enormous growth in ETF listings since late last year. The Dow Jones Industrial Average is the first U.S. index to serve as the basis for an ETF in Israel. KSM DJIA will seek to track the stock performance of the Dow 30, which contains some of the biggest, best-known, and most liquid U.S. blue-chip companies.
"The Dow is known the world over," said Lars Hamich, executive director, global business development, Dow Jones Indexes. "Though it is 108 years old this year, it is well-suited as the foundation for ETFs. The Average's 30 stocks, which are changed infrequently, are among the most liquid securities in existence.'
"KSM DJIA will provide both institutional and private investors premium access to the Dow Jones Industrial Average index," said Roni Biram, chairman of Excellence Nessuah. "Furthermore, the ability to trade in the product on Sundays will allow foreign investors to manage their equity positions even one day before trading opens in Europe and the U.S. Finally, for Israeli investors, the KSM DJIA will enjoy a rate of 15% taxation as opposed to other foreign index linked products, which are taxed at 35%."
Excellence Nessuah's KSM Financial Products arm has rapidly become Israel's leader in ETF securities, having issued four ETFs since November 2003, including the broad market KSM 100 based on the TA 100 index and both a tech and banking sector product. The KSMSX5E was launched in January, and was Israel's first ETF based on a foreign stock index - tracking the Dow Jones EURO STOXX 50. The four ETFs are successfully trading on TASE with an AUM of $100 million and an average daily volume of $5 million.
Israel's ETF marketplace has become robust and competitive, particularly as the local stock market has recovered and as institutions target more foreign investment -- see story
From one ETF in the late 1990s (the Tali 25, tracking the benchmark TA 100 index), Israel now boasts seven tradable index products, with several more in the pipeline, including products tracking Asian stock indexes and U.S. fixed income indexes. It was also reported in Israel's 'Ma'ariv' newspaper that Nasdaq Stock Market is in discussions with the Tel Aviv Stock Exchange to cross list QQQ on the Israeli market.