WHY SMART INVESTORS INVEST IN ISRAEL

Transcription

1 WHY SMART INVESTORS INVEST IN ISRAEL INVESTOR SERVICES INVESTMENT ADVISING PORTFOLIO MANAGEMENT

2 NO RISK GOVERNMENT BONDS! Fixed interest rate! Adjustable interest rate! Inflation-indexed! Short-term Treasury bills LOW RISK CORPORATE BONDS! Highly rated! Collateralized! Proven cash-flow BOND MUTUAL FUNDS! Government! Corporate! Mixed BOND ETFS MODERATE RISK LOWER-RATED INVESTMENT- GRADE BONDS UNRATED CORPORATE BONDS CONVERTIBLE BONDS M ODERATELY S PECULATIVE STRUCTURES STOCK ETFS INDEX TRACKING FUNDS SECTOR FUNDS STOCK MUTUAL FUNDS SPECULATIVE INDIVIDUAL STOCKS HIGH-YIELD BONDS INDEX OPTIONS INVESTING IN ISRAEL Wise Money Israel is glad to offer you this free report. You can find more educational materials, news and tips on investing in Israel, and learn about our account opening, advising and portfolio management services, at INVESTMENT CHOICES Israel offers a wide variety of choices when it comes to investing in its capital market. From stocks, government fixed-rate bonds and inflationlinked corporate bonds, to mutual funds and sector stock ETFs, Israel provides vehicles for all types of investors. Each financial investment instrument is suited to a different type of investor: some investors wish to make more profit (and assume higher risk), while others seek capital preservation as their main goal. Different options are suited to investors with a short-term investment horizon, versus choices that are made for the mid and long-term investor. Still others protect against certain downsides, such as inflation or currency fluctuation. QUICK FACTS: TEL AVIV STOCK EXCHANGE AMOUNT Established 1953 Market capitalization US$ 490 billion Stocks 451 Series of Corporate and Government Bonds 685 Exchange Traded Funds 691 Member Firms 23 Mutual Funds ~1300 R ISK-REWARD SPECTRUM Investing choices can be boiled down to the axiom: No Risk, No Reward. All investment options are placed somewhere on the risk-reward spectrum. The more the investor is willing to risk in price fluctuation, the more one stands to profit. C OMFORT ZONE Each investor determines what his comfort zone is for risk and reward before investing in any market or asset class. I NVESTMENT VEHICLES To the left are investment options based on their risk level. Investors that have many future years to accumulate capital (i.e., younger investors and those still earning income) likely can take more risk to benefit from higher returns. They are willing to invest in stocks, for example, as these usually have a greater potential for high annual returns compared to government bonds. The more speculative investments may be suited to them. Often, a combination of asset classes will provide proper diversification and the correct balance of risk vs. reward. All of these investment instruments can be purchased in a self-managed or professionallymanaged portfolio through Wise Money Israel. DEVELOPED NATION Israel is classified as a "developed market" by MSCI, FTSE and S&P. TEL AVIV STOCK EXCHANGE Trading on TASE is conducted through its members, which include the Bank of Israel (Israel s central bank), 14 banks and 8 investment houses. The banks are supervised by the Bank of Israel and the investment houses by the TASE. SECURITY TYPES Established in September 1953, the Tel Aviv Stock Exchange (TASE) is an efficient one-stop shop for the securities industry, hosting an increasingly sophisticated range of products available to investors, including shares, corporate bonds, treasury bills and bonds, indextracking products and derivatives. TASE is a fully-automated exchange with a central order book trading system, providing clearing, settlement and depository services.

3 WHY SMART INVESTORS INVEST IN ISRAEL E CONOMIC STRENGTH! Successful international investors have recognized Israel s economic strength, reaffirmed by its stability in the recent global financial crisis. It s a good place to put your capital compared with the U.S., Europe and other developed markets. ECONOMIC COMPARISONS ISRAEL U.S. Mid-Cap Stock Growth (since 2009)* 416% 236% Corporate Bond Growth (since 2009)** 66% Unemployment Rate 4.2% 4.4% Balance of Payments Current Account 4.3% -2.6% Inflation Rate 0.7% 2.2% Budge Deficit (% of GDP) 2.2% 3.2% Central Bank Interest Rate 0.1% 1% Real GDP Growth 4.8% 2.0% Debt to GDP Ratio 62% 104% Soundness of Banks Ranking*** 18th 36th Data as of 5/15/2017 * Tel Aviv SME 60 vs. Russell 2000 * Tel Aviv 20 Bond Index ***Global Competitiveness Report 2016! The macroeconomic policies implemented by the Bank of Israel and Israel s Ministry of Finance caused Standard & Poor s international rating agency in recent years to upgrade Israel's sovereign long term credit rating twice, from A- to A+, as it simultaneously lowered credit ratings on many other Western economies, including the United States.! The Bank of Israel was ranked first among central banks for its efficient functioning. "Global Finance's" Central Banker Report Card in August, 2012 named former Governor of the Bank of Israel Professor Stanley Fischer (Fed Chairman Ben Bernanke s thesis advisor and currently Vice Chair of the U.S. Federal Reserve) as one of the world's six top central bankers, with "A" ratings.! Israel endured the global financial crisis of relatively unscathed, with neither sub-prime mortgage/banking crises, plummeting housing prices nor high unemployment. Israel maintained a positive GDP without entering a recession. This contrasts with much of the Western world, including the U.S. s negative 5% GDP. CRITERIA ISRAEL S RANKING AMONG THE NATIONS Overall Economy Compared to World s Developed Nations* 21 Scientific Infrastructure* 3 Technology Infrastructure* 4 Most Innovative Country** 2 Venture Capital Availability** 2 Quality of Research Institutions** 3 Company Spending on R&D** 3 University-Industry R&D Collaboration** 3 *IMD 2015 World Competitiveness Yearbook **World Economic Forum s Global Competitiveness Report OECD Israel is part of this prestigious financial organization that provides a framework for international financial brainstorming and growth planning. Established in 1961, its members are 35 Western nations such as the U.S., U.K., Canada, France and Japan. The OECD praised Israel's scientific and technological progress and described it as having "produced outstanding outcomes on a world scale." NATURAL GAS DISCOVERIES Israel has discovered large natural gas reserves offshore. These large gas discoveries so far have confirmed that the Levant basin of the Eastern Mediterranean contains significant quantities of natural gas and, potentially, crude oil. BusinessWeek estimated the reserves' value at $240 billion. Just the Leviathan gas field alone located in the Mediterranean Sea off the coast of Israel, discovered in 2010 is one of the world s largest offshore gas finds of the past decade. The revenues will add 1% to Israel s GDP. The development of these untapped resources may alter the geopolitical and financial climate of Israel in the next decade.these company are investable via bonds and stocks on the Tel Aviv Stock Exchange.

4 D IVERSIFICATION! Don t put all your eggs in one basket is a well-known investing rule. This is true for asset classes, industries, geographies and markets. It is key for managing risk, and spreading your investments across a range of investment styles and markets may improve the odds of your portfolio benefiting from a greater number of economic or market developments. Respected portfolio managers advise clients to have up to 30%-40% of their portfolio invested internationally. Israel is known as an attractive investment destination.! Hedge against your own currency s erosion by owning securities in multiple currencies. When your own currency is weak, another may be strong.! In these financially turbulent times, it may be time to have some capital outside the borders of your country. During severe economic conditions, governments may limit the transference of capital outside the country, locking you into a quickly eroding currency or market. S TAND WITH ISRAEL! Investing in Israel connects you to the Land of Israel, to the Jewish people, and gives you a stake in its Israel s future growth.! Investing in Israel a practical step that tells your family and friends that Israel is important to you: actions speak louder than words.! By investing in Israel s government and companies via stocks and bonds, you support Israel, its people, its innovation and its economy. YIELD POTENTIAL! During the economic recovery year of 2009, the Tel Aviv 35 stock index returned 75% to investors, vs. the S&P 500 yield of 24%.! Israel s stock market has outperformed other developed markets by far since the year 2000: 184% total return for the Tel Aviv 35 compared to 63% total return for the S&P 500.(as of May 16, 2017).! Individual stock and bonds capital gains, as well as bond interest payments are not taxed in Israel for foreign investors.! Since 2009, Israeli corporate bonds have yields over 6% average annual return with relatively low volatility. WHAT OTHERS ARE SAYING ABOUT ISRAEL "Israel is the best place to invest because of its people. There is no other place with such high quality people with motivation and abilities [that Israel has]. I can say that Israel has a very positive future. You at a nation of entrepreneurs with fantastic capabilities. Throughout Israel, brains and energy are ubiquitous. If you re looking for brains, look no further. Israel has shown that it has a disproportionate amount of brains and energy." - Warren Buffett, famed American billionaire investor "It's no exaggeration to say that the kind of innovation going on in Israel is critical to the future of the technology business." - Bill Gates, Founder, Microsoft "Many of the companies that grow in Israel become global players, and if we can start with them early, as they grow globally, they can become some of the most powerful companies in the world." - Safra Catz, CEO, Oracle Corporation

5 INNOVATION I NNOVATION ONLY ON! A world leader in innovation, Israel has the largest number of companies listed on the NASDAQ outside of North America, more than all of Europe, India, China and Japan combined. Israel is at the very forefront of discoveries, new inventions, and technologies.! Israel leads the world in technology start-ups companies per capita, and has more start-ups than any country other than the U.S. This is very significant considering the country s population (only 1/1000th of the world s population) is relatively small compared to many other countries such as India, China, Brazil, UK, France, etc.! Israeli companies, particularly in the high-tech area, have enjoyed considerable success raising money on Wall Street and other world financial markets. THE TASE You can gain exposure to many of Israel s innovative tech and medical device companies only on the Tel Aviv Stock Exchange. C UTTING EDGE Israeli engineers are on the cutting edge of solar energy, irrigation and desalinization technologies, and its companies are leaders on such projects all around the world.! Israel as a nation that has contributed much to the world: In less than 70 years, Israel has won more Nobel Prices per capita than any other country other than Switzerland. Israel leads the world in the number of scientists and technicians in the workforce. It also has the most physicians and engineers per capita.! More Israeli patents are registered in the U.S. than from Russia, India and China combined (combined population 2.5 billion). It leads the world in patents for medical equipment. Israel has attracted the most venture capital investment per capita in the world, 30 times more than Europe. Israel is ranked in the top five Cleantech countries of the world, and operates the world s largest desalinization plant.! Israeli companies invented the drip irrigation system, discovered the world s most used drug for multiple sclerosis, designed the Pentium NMX Chip technology, the Pentium 4 and Centrium microprocessors, and created Instant Messenger (ICQ). S TART-UP NATION Israel is indeed the Start Up Nation, well known for its global achievements in the innovation sphere. High-tech represents a very high portion of Israel s export more than 37%. Israel is also ranked first in the world with (civilian) R&D investment equivalent to more than 4% of GDP. The number of patent application (in the U.S.) per capita is the highest in the world. F OREIGN INVESTORS are permitted and encouraged by the State of Israel to directly invest in the Israeli capital market in shekels. This expresses itself in an almost complete tax exemption on capital gains and interest earned in Israel.

6 E VAN LIBERMAN F OUNDER & CEO With 15 years in capital market experience including investing on Wall Street and in Israel, Mr. Liberman is licensed by the Israel Securities Authority for Investment Advising. S TEFAN SILVER D IRECTOR, BUSINESS DEVELOPMENT & O PERATIONS Stefan holds a B.A. in Economics and Management, and an MBA from Haifa University. WISE MONEY ISRAEL Y OUR ISRAELI INVESTMENT SPECIALIST Wise Money Israel is an Israel-based, registered and Israel Securities Authority-licensed investment management firm that assists clients to open brokerage accounts via mail, provides investment advising services and facilitates professional portfolio management to individual investors and corporations in Israel and abroad. We work with brokerages that have over $45 billion assets under management. At Wise Money Israel, enhancing and protecting our clients' capital to achieve financial security is what we do best. We dedicate our time and expertise to the construction and maintenance of individual and corporate investment portfolios to meet the needs of investors seeking a personal, trusted service. P ERSONAL RELATIONSHIPS At Wise Money Israel, our client s enjoy a personal relationship with meticulous client service. We are always available and are skilled in providing an appropriate investment solution to the changing needs of clients and market conditions. Each client is assigned a personal investment advisor, who assesses his/her financial needs, preferred level of risk and investment objectives, and then tailors the investment services accordingly. Our clients come from diverse backgrounds and investment expertise. They include individual, joint and corporate clients. Some are Israeli citizens and others are foreign residents. Each receives devoted one-onone management attention in their own language. This is critical to understand the client s needs and to devote individual attention to making the client s portfolio as profitable with the least risk as possible, year in and year out. Because the client is at the center of our focus, our client base continues to recommend our services to others throughout the years of engagement with Wise Money Israel. Address: 6 HaMelacha Street Binyamina Israel info@wisemoneyisrael.com I NVESTMENT P RACTICES Fundamental-driven The details are in a company s management, business plan, Earnings Statement and Balance Sheet. There is no substitute for in-depth security and credit analysis. Risk Management Diversification and risk management are required to limit portfolio volatility and are as important to us as return enhancement. Discipline It is crucial to not chase fads and to be able to recognize when markets or securities are overvalued and under-valued. Maintaining proven beliefs and investment processes is crucial for long-term success. E XPERIENCE and sound judgment count for everything in investment management. These qualities, like good character, are built up over a period of years. W E SPEAK YOUR L ANGUAGE We are native Hebrew and native English-speakers, so that the client receives thorough guidance, expert advice and explanations in his/her mother-tongue. It is rare to find investment professionals in Israel who work so successfully with English-speaking investors in Israel and abroad.