Israeli investors have kept close watch on the Tel Aviv Stock Exchange's lead index, the TA-25, for years, but just this May the index began to come to the attention of investors across the globe, with the launch of a TA-25-based ETF which is traded on the New York Stock Exchange. An ETF, or exchange-traded fund, is a financial instrument which allows investors to take a proportionate stake in stocks which otherwise might be difficult to access or keep tabs on. These funds hold stocks according to precise parameters, often following a leading index such as the Dow Jones Industrial Average or the Standard & Poor's 500, allowing an investor to access a basket of dozens or even hundreds of stocks while only having to trade a single fund, listed on major exchanges. ETFs, which have grown to encompass more than $500 billion over the past decade, are also a convenient way to invest in a foreign economy without having to deal with the technical hurdles inherent in overseas investment. Last May, Northern Trust Global Investments, the third largest global institutional index asset manager, launched a series of ETFs tracking major worldwide stock exchanges, including the NETS TA-25 Index Fund, known by its ticker symbol TAV. The TA-25 index tracks the prices of the shares of the 25 companies with the highest market capitalization on the Tel Aviv Stock Exchange, and is the most recognized benchmark for Israeli blue-chip stocks. Within Israel, several ETFs tracking the TA-25 are listed, as are very active options on the index. Steven Schoenfeld, who literally wrote the book on index investment (Active Index Investing, published by Wiley Finance in 2004), was the driving force behind the creation of the TAV. "As a firm, we felt it was an important recognition of Israel's importance as a capital market," Schoenfeld, the Chief Investment Officer for Global Quantitative Management at Northern Trust, told The Jerusalem Post earlier this month. "Northern Trust was launching a family of ETFs tracking the world's best-known indexes, including Hong Kong's Hang Seng, Japan's TOPIX and London's FTSE 100, and Israel was included in that first wave of indexes." According to Schoenfeld, the inclusion of the TAV was made possible by Israel's progress from emerging to developing market. "We consider Israel to be a well regulated and efficient market, with capital markets which are very advanced. The market was tested during the [2006 Second] Lebanon War, when the markets stayed open," said Schoenfeld, who first gained familiarity with Israeli finance while working at the World Bank's International Finance Corporation during the early 1990's. Officials at the Tel Aviv Stock Exchange were in dialogue with Schoenfeld about the possibility of an Israeli ETF, which, it was felt, would increase the visibility of the Israeli capital markets. An added advantage of the TAV is that it is traded during New York trading hours, which means investors can buy and sell not only during later hours but on Fridays and on Israeli holidays, as well. Schoenfeld said he has noted a reciprocal relationship in off-hour trading between the stock exchange and the TAV. During the recent holiday season, which coincided with major volatility in worldwide finance, the TAV often predicted how the TASE would react to new developments after it had come back from a holiday break, while early trading on the TASE will usually foreshadow TAV performance later that day. Schoenfeld explained why investing with the TAV is different than purchasing Israeli stocks traded in America. "While many Israeli companies are traded on the New York Stock Exchange or NASDAQ, these are concentrated in the hi-tech sector, and are mostly globally-focused companies, and thus have relatively-less exposure to the Israeli economy," he said. "In contrast, the TA-25 is heavily invested in the Israeli economy - with bank and real estate stocks, consumer staples like Strauss Group, and the local telecommunications market like Bezeq." "TAV gives investors the ability to have a diversified interest in the Israeli economy." Schoenfeld reported that several meetings and seminars which were held to introduce the TAV generated enthusiasm from a wide range of investors. "There was interest from institutional investors such as hedge fund and mutual fund managers. There was also interest from American Jews and the pro-Israel community," he said. The first events were in New York and Washington, D.C., with more planned for St. Louis and Philadelphia for December. Furthermore, at the upcoming UJC Investment Institute, of which both TASE and Northern Trust are sponsors, a session on investing in Israel is on the agenda. "There were many investors who were familiar with Israeli NYSE-traded stocks, but were interested in ways to access local stocks," Schoenfeld recalled. "TAV is an efficient way to get access to world-class companies listed in Israel."