Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some Israeli stocks and companies with strong links to Israel to your portfolio but don't have the time or expertise to hand-pick a few, the Market Vectors Israel ETF (ISRA 1.69%) could save you a lot of trouble. Instead of trying to figure out which Israeli stocks will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual-fund cousins. This ETF, focused on Israeli stocks and companies with ties to Israel, sports a relatively low expense ratio -- an annual fee -- of 0.59%. The fund is tiny, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF is too young to have a meaningful enough track record to assess. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why Israeli stocks?
It's smart to diversify your portfolio geographically, and Israeli stocks can help you do that. (You may be surprised to learn that more than a few companies you're familiar with are based in Israel.) Despite the geopolitical strife within and around the country, Israel's economy has continued to grow.

Plenty of Israeli stocks (and ones with strong ties to Israel) had strong performances over the past year. 3-D printing specialist Stratasys, Ltd. (SSYS -0.61%), for example, popped 39%. It's linked to Israel through its purchase of fellow 3-D printing concern Objet. Stratasys' stock took a hit earlier this month when management offered mixed near-term projections, but bulls like the company's investments in its future that will fortify its moat and they are pleased with acquisitions such as MakerBot.

OPKO Health (OPK 0.41%) jumped 37% and is tied to Israel via its purchase of Israel's Prolor Biotech. OPKO Health has bulls hopeful about its Rayaldy drug, which targets thyroid disorder, chronic kidney disease, and vitamin D deficiency. It's also developing diagnostic tests for Alzheimer's disease and several cancers and has pharmaceutical, nutraceutical, and veterinary products on the market in Europe and Latin America. Still, while its top line is growing, OPKO's bottom line is red, and it's burning cash. Gaining FDA approvals will help boost investor confidence.

Teva Pharmaceutical Industries (TEVA 0.39%), with strong ties to OPKO Health, gained 18% and yields 2.5%. Teva Pharmaceutical has some worried about the impending patent-protection expiration of its multiple sclerosis drug Copaxone (which it's trying to delay). Bulls would remind you, though, that it's still a major player in generic drugs, with more than 140 product registrations awaiting FDA approval. Teva Pharmaceuticals recently bought NuPathe and its FDA-approved patch for migraines. Its multiple sclerosis drug Laquinimod recently failed to win approval in Europe, and Teva isn't seeking approval in the U.S. at the moment due to unimpressive trial results.

Other Israeli and Israel-related stocks didn't do quite so well over the last year but could see their fortunes change in years to come. Chipmaker Mellanox Technologies, Ltd. (MLNX) shed 22%, with analysts at Stifel saying in December that it expects business to pick up and reiterating a buy rating. This month, though, Barclays analysts downgraded Mellanox to underweight, while TheStreet has it as a hold, citing growing profit margins but shrinking net income. Its last few years were quite strong, as it invested heavily in cloud computing, but its stock has been rather volatile. Mellanox Technologies will release its fourth-quarter results on Jan. 29.

The big picture
If you're interested in adding some Israeli stocks to your portfolio, consider doing so via an ETF. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.