March 16, 2000
Investing in Israel
Businessman channels love for Israel into returns for mutual fund investors
Cliff Goldstein, 42, launched AMIDEX35 last year, a mutual fund index that tracks and invests solely in 35 of Israel's largest companies. The mutual fund's exclusive interest in Israel is a first for any American fund.
While his project continues to prosper, its success has a more personal meaning for its founder.
Goldstein's interest in Israel began at the age of 7, when his father brought him to a shareholders' meeting of Ampal, an Israeli holding company.
"He bought me five shares," Goldstein, who lives in Pennsylvania, recalls, "which totaled about $1.50 back then, but it made me a shareholder." He remembers those who participated in that meeting at the Waldorf Astoria as a group of people who were not only interested in making money.
"These people were there for a purpose: to invest and support Israel," Goldstein says.
When his father died three years ago, Goldstein began to learn more about his father's connections with Israel and its future. Goldstein felt the proper thing to do with his inheritance would be to invest in his father's dream.
Investing in a single Israeli company, however, was not the answer for Goldstein, who says he was watching the growth of Israeli companies with excitement.
"I wasn't happy with personal results, though," Goldstein says. "So I looked for mutual funds to diversify my Israeli investments."
So the index of AMIDEX35 was born on Jan. 1, 1999, with Goldstein's hopes of honoring his father's legacy and "finding a path to assist others to invest in Israel."
The mutual fund was introduced by Goldstein's company, TransNations Investments of New York, later on in June. The fund represents a diverse spectrum of Israeli businesses.
Since its launch date, AMIDEX35 has gone up 42.9 percent, and the fund's assets approach $10 million, according to Goldstein.
With more than 100 Israeli companies trading on the Tel Aviv Stock Exchange and 120 on the New York markets, Israel has developed many technology industries alongside traditional banks, insurance and retail. Many, however, are business-to-business industries, making the actual product or service practically unknown to the average consumer.
"Most Israeli technology companies are not household names to us," Goldstein says. "But the chip in the billing software your company uses may be Israeli, even though you may not see an Israeli name."
Businesses opt to trade on the New York markets, however, "because that's where the money is," Goldstein says. "More than half of Israel's stocks are traded outside of Israel," he says. Israel is third, behind the United States and Canada, in the number of companies represented on U.S. exchanges. AMIDEX35 incorporates companies traded on the Israeli and New York markets.
Companies tracked by the index include Check Point Software Technologies, TEVA Pharmaceuticals and Gilat Satellite Networks.
"It often shocks people," Goldstein says of the image people hold of Israeli businesses. "They imagine some guy in shorts and a funny hat selling oranges, but the image is changing."
According to Goldstein, Israel is second behind the United States in the number of new high-technology start-up companies.
"Israel has become a second Silicon Valley in every shape and form," according to Abba Horovitz of Yeoman Capital, an investment firm in Israel. "Wall Street has started to acknowledge that."
Horovitz says there is an increased interest in Israeli investment.
According to Horovitz, examples of new technologies developed by Israeli industries include a computer screen one millimeter thick that can be folded to fit in a pocket. The Israeli company Comverse has become the leader in virtual private networks, while Check Point Software has become the leader in the development of firewalls, security measures to protect Web transactions.
"There's a boom going on here and I don't think it will finish," says Horovitz.
"Buying Israel Bonds has always been popular," Goldstein says, "But that is a debt -- you're lending money to the government. This is different. You're investing, not lending, and becoming a partner in the private sector. It's a proud moment for every American Jew.''
While the fund currently attracts mostly individual investors, Goldstein expects future investors to include pension funds, foundations and other types of industries.
AMIDEX35's Web site can be accessed at http://www.amidex.com.