Israel is a core market for fund managers focused on the Middle East, giving quite a lot of choice to anyone looking to gain exposure to it. Open ended single-country funds include Israel 2000, managed by Rothschilds, State Street Actions Israel and Svecia Israel Selection. Israel 2000 invests in Tel Aviv stocks and US issues of relevance. The fund is run on a multi-manager basis and since it was launched in 1994, three managers have been fired for poor performance. The performance of each manager is compared the Mishtanim index with US portfolios tracked against the CBOE Israel Index.

State Street Actions Israel is a tracker fund, tied to the MSCI Israel index, which follows a rigorous active quant management formula. The principle involves replicating the index through sampling techniques. The focus of the management is therefore towards fundamental valuations rather than macro-economic variables, sentiment and company visits. The managers will continue to maintain a fully invested position consistent with the index replication strategy.

Moshe Jonas, manager of the Svecia Israel Fund, is bullish on the market on a medium to long view because of the recent reductions in interest rates, which are expected to continue falling. He looks for major themes for his stock selection, particularly against the background of political events. He has an agreement to exchange information with a leading US broker and this provides him with details of opportunities in the US. The fund is focused towards blue chips and is benchmarked against the TASE. There are also two closed-ended funds, the First Israel Fund, run by BEA Associates and BGI's Israel Fund.

The pick of the regional funds is Martin Currie's Near East Opportunities Fund. Chris Butler, who has recently taken over from Tristan Clube as manager of the fund, currently favours technology and pharmaceutical stocks, an area where Israel is globally competitive. Butler has almost half of the $33m fund assets now invested in Israel.

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