Bluestar Israel Equity Update Fourth Quarter 2014 Q3 2014 in Review & Q4 2014 Outlook
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BlueStar Israel Equity Update Fourth Quarter 2014 Q3 2014 in Review & Q4 2014 Outlook The S&P 500 index gained 1.10% in Q3 2014. MSCI EAFE and MSCI EM lost What’s Inside -5.80% and -3.40%, respectively. Israeli Global The BlueStar Israel Global Index (“BIGI ®”) declined 0.90% in Q3. Financials, Materials and Telecommunication Services stocks led the decline in Israeli 1. Equities in Q2 Global Equities while Information Technology, Energy and Health Care stocks 2014 moved higher. ® Volatility in global equity indexes rose sharply towards the end of Q3 as 2.-4. About the BIGI investors began to fear a recession in Europe, slower global economic growth, Index and a rise in U.S. interest rates. Israeli Global Equities demonstrated resilience during Israel’s Operation 5-6. Technical Analysis Defensive Edge in the Gaza Strip. As a result of the conflict though, tourism and consumer spending declined in Q3 compared to the previous year. 7. About the Israeli companies continued to list on U.S. exchanges during the quarter. BIGITech Index Among the most notable were technology companies Mobileye, CyberArk and ReWalk. They will all be eligible to enter the BIGI and/or the BIGITech during the 8. Israeli IPOs in December 2014 rebalancing. 2014 The Bank of Israel lowered its policy interest rate twice during the third quarter. That and the expectation that the Federal Reserve will increase U.S. interest 9. Israeli Economic rates in mid-to-late 2015 contributed to a sharp depreciation of the Shekel against the Dollar. This should be supportive of export growth going forward, a Review & Outlook recent problem for the Israeli economy. 10. Geopolitical The IMF lowered its global GDP growth forecast as well as its forecast for Israeli GDP growth for both 2014 and 2015. The Bank of Israel’s also lowered its Environment GDP growth forecast for Israel. BIGI® Performance (BlueStar Israel Global Index, Jan. 2010- Sept. 2014) 190 170 150 TA-100 130 S&P 500 BIGI 110 90 70 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 1 © 2014 BlueStar Global Investors, LLC These are not recommendations to buy or sell any security ® About the BlueStar Israel Global Index The BlueStar Israel Global Index (’BIGI®’) provides a benchmark for investors to track the broadest and deepest universe of Israeli public companies. The index is constructed using BlueStar Indexes’ unique methodology and proprietary database of Israeli and Israel-linked companies. BIGI® includes the largest and most liquid companies as well as mid and small cap companies that display sufficient liquidity for global investors. The index methodology allows for the inclusion of Israeli companies listed on the Tel Aviv Stock Exchange as well as other exchanges such as the London Stock Exchange, New York Stock Exchange, and NASDAQ. The BlueStar Israel Global Index has been created to provide investors with an investable product allowing them to quickly take advantage of both event-driven news and long-term economic trends as the economy and companies of Israel continue to evolve. Comparative Sector Weights Long- Term Returns* MSCI - FTSE Sector BIGI® TA-25 TA-100 Q3 2014 1yr. 3yrs. 5yrs. 10yrs. EIS Israel Information Technology 31.5% 6.1% 3.2% 4.7% 8.1% ACWI -2.20% 11.89% 17.24% 10.65% 7.84% Health Care 30.1% 24.5% 57.3% 24.3% 25.2% EAFE -5.83% 4.70% 14.16% 7.04% 6.80% Financials 18.5% 37.8% 19.9% 33.2% 32.6% Materials 5.2% 9.9% 6.0% 7.9% 6.8% MSCI EM -3.36% 4.66% 7.56% 4.76% 11.03% Energy 4.7% 5.7% 3.8% 14.7% 12.0% S&P 500 1.13% 19.73% 22.99% 15.70% 8.11% Telecom. Services 3.2% 6.7% 4.9% 9.5% 7.0% MSCI Israel 0.38% 29.77% 11.20% 2.63% 8.45% Industrials 2.7% 5.1% 2.6% 2.9% 4.4% TA-100 -3.00% 9.39% 10.70% 7.50% 11.01% Consumer Discretionary 1.9% 0.7% 0.4% 0.0% 1.3% TA-25 Consumer Staples 1.7% 3.5% 1.8% 2.8% 2.6% -2.20% 10.38% 10.90% 8.38% 12.82% Utilities 0.4% 0.0% 0.0% 0.0% 0.0% BIGI® -0.91% 15.03% 13.65% 9.55% 12.46% Source: BlueStar Global Investors LLC *Annualized Sept. 30, 2014 1Inception Date: Dec. 1992 Source: BlueStar Global Investors LLC Sept. 30, 2014 Five Year Correlations Comparative Risk (Standard Deviation of Returns)* MSCI ACWI MSCI EM EAFE S&P 500 TA-100 TA-25 BlueStar Q3 2014 1yr. 3yrs. 5yrs. 10yrs. Israel ACWI 1.00 ACWI 9.55% 9.13% 12.12% 14.62% 16.62% EAFE 6.35% 9.60% 14.24% 16.60% 18.28% MSCI EM 0.90 1.00 MSCI EM 19.10% 13.69% 17.19% 18.55% 23.85% EAFE 0.97 0.86 1.00 S&P 500 10.78% 8.87% 10.57% 13.20% 14.71% S&P 500 0.96 0.80 0.87 1.00 MSCI Israel 8.57% 11.33% 16.04% 18.17% 18.44% MSCI Israel 0.66 0.68 0.60 0.62 1.00 TA-100 0.76 0.75 0.74 0.71 0.85 1.00 TA-100 4.61% 8.81% 14.26% 17.50% 21.46% TA-25 0.75 0.75 0.73 0.69 0.84 0.99 1.00 TA-25 8.15% 9.90% 15.27% 18.08% 21.71% ® ® BIGI 0.81 0.77 0.78 0.76 0.86 0.97 0.93 1.00 BIGI 4.05% 9.54% 13.68% 17.26% 19.69% *Annualized Source: BlueStar Global Investors LLC 1Inception Date: Dec. 1992 Sept. 30, 2014 Source: BlueStar Global Investors LLC Sept. 30, 2014 2 © 2014 BlueStar Global Investors, LLC These are not recommendations to buy or sell any security BlueStar Israel Global Index ® Constituents and Weights Index Weight as Index Weight as Company Name Ticker Exchange Company Name Ticker Exchange of Sept. 30, 2014 of Sept. 30, 2014 1 Teva Pharmaceutical Industries TEVA IT 13.08% 58 Syneron Medical Ltd ELOS UQ 0.35% 2 Perrigo Company plc PRGO UN 11.76% 59 Rami Levi Chain Stores RMLI IT 0.34% 3 Check Point Software (US) CHKP UQ 6.36% 60 888 Holdings Plc 888 LN 0.34% 4 Amdocs Ltd DOX UQ 4.77% 61 Allot Communications ALLT UQ 0.32% 5 Bank Hapoalim BM Reg POLI IT 3.80% 62 Ceva Inc CEVA UQ 0.32% 6 Bank Leumi Le-Israel BM LUMI IT 3.63% 63 Nova Measuring Instruments Ltd NVMI IT 0.32% 7 Stratasys Ltd SSYS UQ 3.34% 64 Ituran Location & Control Ltd ITRN IT 0.31% 8 VeriFone Systems Inc PAY UN 2.34% 65 SafeCharge International Group SCH LN 0.31% 9 Bezeq BEZQ IT 2.22% 66 Menorah Insurance Co Ltd 1 MMHD IT 0.31% 10 Israel Chemical Corp ICL IT 2.08% 67 Delta-Galil Industries DELT IT 0.30% 11 VERINT SYSTEMS VRNT UQ 1.92% 68 Electra (Israel) ELTR IT 0.30% 12 Nice Systems Ltd NICE IT 1.65% 69 Naphtha Israel Petroleum Corp NFTA IT 0.29% 13 Playtech PTEC LN 1.52% 70 Clicksoftware Technologies Ltd CKSW UQ 0.29% 14 Israel Corp ILCO IT 1.44% 71 Evogene Ltd. EVGN IT 0.29% 15 Taro Pharmaceutical Industries TARO UN 1.42% 72 DSP Group DSPG UQ 0.28% 16 Delek US Holdings DK UN 1.29% 73 Africa Israel Properties AFPR IT 0.27% 17 MELLANOX TECH MLNX UQ 1.18% 74 Bayside LandCorp 1 BYSD IT 0.27% 18 Opko Health Inc OPK UN 1.17% 75 FIBI Hldgs FIBI IT 0.27% 19 Delek Group Ltd DLEKG IT 1.16% 76 SuperCom Ltd. SPCB UQ 0.26% 20 Israel Discount Bank 0.1 DSCT IT 1.12% 77 Shufersal Ltd. SAE IT 0.26% 21 Mizrahi Tefahot Bank Ltd MZTF IT 1.11% 78 Discount Investment Corp DISI IT 0.26% 22 Elbit Systems Ltd ESLT IT 1.04% 79 Matrix MTRX IT 0.25% 23 Caesar Stone Sdot Yam Ltd CSTE UQ 0.89% 80 Formula Systems (1985) Ltd FORT IT 0.25% 24 Azrieli Group AZRG IT 0.79% 81 Israel Phoenix Assurance 1 PHOE1 IT 0.25% 25 Paz Oil Company Ltd PZOL IT 0.76% 82 Fox Wizel FOX IT 0.25% 26 Frutarom FRUT IT 0.75% 83 Mazor Robotics Ltd. MZOR IT 0.25% 27 Gazit Globe 1982 Ltd GZT IT 0.71% 84 Magic Software Enterprises Ltd. MGIC IT 0.24% 28 LivePerson Inc LPSN UQ 0.59% 85 Africa-Israel Inv Ltd AFIL IT 0.24% 29 Osem Investment OSEM IT 0.58% 86 Sapiens Intl Corp SPNS UQ 0.24% 30 Radware Ltd RDWR UQ 0.58% 87 PLURISTEM THERAP PSTI UQ 0.24% 31 Ezchip Semiconduct EZCH IT 0.57% 88 Mivtach Shamir Hldgs Ltd MISH IT 0.23% 32 Imperva Inc IMPV UN 0.55% 89 Meitav DS Investments Ltd MTDS IT 0.23% 33 Strauss Group STRS IT 0.55% 90 Plasson Industries Ltd. PLSN IT 0.22% 34 Harel Insurance Inv Ltd 1 HARL IT 0.49% 91 Varonis Systems Inc VRNS UQ 0.21% 35 Orbotech Ltd (US) ORBK UQ 0.49% 92 Big Shopping Centers Ltd.