When Boaz Rahav and his partners in the New York investment firm TNI conceived the notion of founding a mutual fund and index dedicated exclusively to the Israeli business world, they were able to conjure with the Wall Street reputation enjoyed by the Israeli high-tech industry. The index, known as Amidex (American Israeli Index), is based on the share quotations of the thirty-five largest and most successful companies in the Israel economy that are traded both in Tel Aviv and on Wall Street (mainly on the NASDAQ).
Since first being presented on January 1, 1999, the index has jumped by 180%. The fund's share has advanced by 98% since being launched in June 1999, and by 48.7% since the beginning of the year. The young fund's manager Rahav, along with its founders, Ron Tira and Gadi Bar, possesses limited marketing resources. Amidex seemingly ought to have a built-in attractiveness. Yet they realised they would not only have to compete with the funds and shares of long-standing, well-established companies, but must also labour to spread the glad tidings among all investors who might not necessarily even be aware of the existence of the Israeli index and fund.
Boaz Rahav: "When launching the fund, our advertising focused mainly on the Internet, and today we have some 40,000 hits on our site daily. We felt it important that the fund should be perceived as being available to all and as a 'no-load', meaning that it would not involve a buying or selling commission. We wanted to make sure that everything was working properly before going on to more aggressive marketing".
On the face of it, an Israeli mutual fund sounds like an attraction for the typical Jewish investor purchasing bonds. But Rahav tells of finding a response not only from Jewish publics. "We are being approached by young people who invest on-line and got tips from financial cable channels, which consider Israel to be an attractive investment target. Devout Christian investors also show great interest, as they regard investment in the fund as a way of expressing their love for the Holy Land".
Neither is the Zionist-marketing aspect neglected. Information on the fact of Amidex's existence reaches the Jewish community through advertising in Jewish magazines in the US, with Rahav co-operating with the Economic Consulate in New York and with the Bonds.
"We are not in competition with the Bonds", he emphasises, "even though we also address their target public. We hold events jointly with the Bonds and we also do a fair amount of explanation on behalf of the Israeli economy and shares. We even have a sense of being involved in a pioneering effort. After all, we are the first to market and sell Israel to the ordinary investor, without assuming the guise of a battery of analysts coming out with sophisticated models that nobody understands". The ordinary investor, or, for present purposes, the typical Amidex investor, puts in $2,500-5,000.
Its marketing efforts, in any event, helped the fund double its assets to $10 million in recent months, and hundreds of new accounts are opened every week. Rahav & Co. feel the time is now ripe for the major offensive that could inflate the fund to hundreds of millions of dollars.
Today, with the fund and index posting impressive growth, they appear in the CNN economic magazine, in the CNBC finance channel and on the CBS Marketwatch site. Amidex is also included in the Bloomberg list of indices, and the fund is offered on the sites of some of the market's most outstanding online brokers, such as Ameritrade and E*Trade.
Rahav is currently preparing for a road show, which, he hopes, will put Amidex on the US investment map. Together with his partners, he will begin a 90-day campaign, bringing the glad tidings of the fund and the index to a waiting world, namely to brokers. He has already made contact with a "wholesaler" who will support sales to the brokers, and will, in effect, be in charge of contact with tens of thousands of US brokers, who will receive attractive selling commissions and push the fund aggressively.
Rahav: "We prefer the fund to be marketed by the brokers, rather than do it ourselves directly. This is the first time purely US brokers, with no Israeli orientation, are boarding an Israeli investment instrument and mutual fund, and are prepared to market it aggressively".
Published by Israel's Business Arena on 20 March, 2000