Executive Summary

Israel technology led the NASDAQ 100 in Q2 and continues to deliver a diversified exposure of broad technology themes:

Renewable energy got a boost in Q2, accounting for nearly half (2.23%) of the fund’s 4.86% quarterly absolute return. This includes companies like Solar Edge (+65% in Q2) along with Enlight & Energix Renewal Energies (both +28% in Q2), in addition to geothermal powerhouse Ormat (+12% in Q2).

Biotech medical devices pulled back from a strong Q1, while 3D printing market share leader Stratasys (+23% in Q2) acted as a ballast.

The index continues to deepen and capture the latest IPO’s – watch for pending inclusion of Splitit Payments, Tuffin Software, Nanodimension, and Gett Taxi (filing in 2H19).

Fund Performance

The BlueStar Israel Technology ETF (ITEQ) returned 4.75% for the quarter ended June 30, 2019, which was in line with its benchmark, the BlueStar Israel Global Technology Index.

At the sector level, ITEQ’s 75% weight to Information Technology (+4.6%) was the largest positive contributor to performance, followed by Industrials (+15.9%) and Health Care (+16.3%). The lone Financials company in the portfolio, a 1% weighting to Plus500 ltd (-32.2%), made Financials the largest negative-contributing sector in ITEQ.

At the security level, ITEQ’s positive contributors were led by Novocure Ltd (NVCR, +31.3%), Wix.com (WIX, +17.6%), and SolarEdge Technologies (SEDG, +65.8%). Negative contributors to performance included, again, Plus500 (PLUS LN, -32.2%), Checkpoint Software (CHKP, -8.6%) and Verint Systems (VRNT, -10.2%).

Looking at fundamental factor performance, ITEQ benefitted from region and industry, while style factors tended to drag on the portfolio’s returns. Factors contributing positively were exposures to the global markets, Israel Equity, and Software. On the negative side, detractors included exposure to the style factors Trade Activity, Size and Earnings Variability.

Breaking down the style factors, ITEQ’s performance was helped by exposure to Momentum, Growth, and Leverage; while Trade Activity, Size and Earnings Variability were the main detractors in Q2.

 

 

Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477), or by visiting www.etfmg.com/ITEQ. Read the prospectus carefully before investing.

Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Narrowly focused investments typically exhibit higher volatility. Investment in securities of Israeli companies involves risks that may negatively affect the value of your investment in the Fund. Among other things, Israel’s economy depends on imports of certain key items, such as crude oil, coal, grains, raw materials and military equipment. Foreign investing involves special risks such as currency fluctuations and political uncertainty. Funds that invest in smaller companies may experience greater volatility. Funds that emphasize investments in technology generally will experience greater price volatility. The Fund’s return may not match or achieve a high degree of correlation with the return of the BIGITech® Index. To the extent the Fund utilizes a sampling approach, it may experience tracking error to a greater extent than if the Fund had sought to replicate the Index. Diversification does not guarantee a profit, nor does it protect against a loss in a declining market.

The BlueStar Israel Global Technology Index (BGTH) considers all Israeli companies regardless of listing venue and allows for the inclusion of companies operating in a range of industries from information technology to biotechnology to clean and sustainable agriculture and energy technology.

The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG Financial LLC is not affiliated with BlueStar Indexes.

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