The iShares MSCI Israel Capped Index Fund (EIS) is designed to give investors access to the total Israeli market, but it is heavily influenced by its top holding, Teva Pharmaceuticals (TEVA), which accounts for over 22% of the fund’s total portfolio.
While having such a large slice devoted to a single firm makes a fund riskier, TEVA’s optimistic outlook for the future may actually strengthen the case for holding EIS.
Today, Teva is the largest player in the massive global generic market and yesterday Barron’s wrote positively on the company’s plans to double its size over the next five years, which helped the fund close higher on a broadly down day.
Growth is expected to come from a combination of increasing global demand for cheaper, generic drugs and a number of attractive acquisitions.
Though the plan for expansion is aggressive, the magazine claims that given the current environment, the firm’s goals are definitely achievable.
In the U.S., Teva already controls a quarter of all generic drug sales and is looking to increase that stake in the near future. The U.S., however, does not appear to be the firm’s only target. As part of their five year expansion plan, Teva hopes to increase its presence overseas, earning half of its revenue outside North America.
Disclosure: no positions