Whatever Happened to...The Israel ETF?

Yep, we just asked that question. For avid followers of our regular "Whatever Happened to..." ETF feature, you have no doubt become accustomed to our examinations of

. To be sure, the iShares MSCI Israel Capped Investable Market Index Fund

is not obscure. In fact, it's the only ETF exclusively devoted to the world's 39th-largest economy (World Bank estimate). That heft hasn't helped EIS at all this year as the ETF has tumbled 33.1%. In fact, the performance of EIS has been so miserable, the ETF has been easily outpaced by the ETFs that track Ireland, Italy and Spain. In other words, 60% of the PIIGS have delivered better returns in 2011 than EIS has offered. The problems for EIS are not hard to identify. The geography issue will always be a concern as Israel is the lone stable developed market in an area loaded with volatile frontier markets. Then there is geography part II and that is some folks treating Israel as a European country, making EIS a guilty by association ETF this year. Of course, the 20% slide in shares of Teva Pharmaceuticals

hurts. That stock accounts for over 25% of the ETF's weight, underscoring the notion that EIS is one of those ETFs that is excessively weighted to just one stock. Speaking of excessive, that's what a 28.4% weight to financials is this year. Find better ETF ideas

. Fortunately, support for EIS looks firm at $37. Unfortunately, a drop below $37 would take EIS back to levels not seen since early 2009. EIS is currently almost 34% below its 52-week high and nearly 18% below its 200-day moving average. On another note, it might be wise for iShares to do some rebalancing with this ETF. Who are we to tell ETF issuers how to construct their funds, but it would be nice to see EIS ratchet up its energy exposure. After all, Israel's Leviathan natural gas field is believed to hold 17 trillion cubic feet of gas, but the energy sector accounts for just 2.6% of the weight of EIS. Bottom line: EIS is probably one of the steadier options when it comes to ETFs tracking countries located in the Middle East as it's the only developed market fund in the region. However, the investment thesis for this corner of the globe has been repudiated this year and investors would do well to let EIS make some gains and show it wants to rally rather than try to bottom fish with this ETF.