Cathie Wood and the ARK ETFs were one of the financial markets' biggest success stories. Up until about a year ago. That's when her disruptive growth theme fell deeply out of favor and the losses started piling up, points out David Dierking, editor of TheStreet's ETF Focus.

From their peak in February 2021, the big name ARK ETFs are down between 40-50%. And 2022 may not be much better for the ARK ETFs. A slowing growth environment where inflation is 7% and the Fed is about to hike rates isn't necessarily ideal for high growth stocks.

That doesn't mean investors should disqualify the ARK ETFs altogether. In fact, I think there's one that could actually do well this year.

You may not know that this ETF even exists, but the ARK Israel Innovative Technology ETF (IZRL) actually been around since 2017. With a relatively modest $250 million in assets, it doesn't get but a fraction of the attention that funds, such as ARKK and ARKW get, but it's a bit unique to the ARK.

It follows a similar high level strategy to Ark Innovation ETF (ARKK), but focuses, as the name suggests, on the Israel economy. Why Israel? The country is generally considered on the hottest spots for technological innovation outside of the obvious places, such as the United States and China. Israel is categorized as a developed market by MSCI, but its allocation within the iShares Core MSCI EAFE ETF (IEFA) is only 1%.

Outside of specific Israel-focused ETFs, you'll find only a handful of funds with anything above a 5% allocation to this country. IZRL is one of just two ETFs — the BlueStar Israel Technology ETF (ITEQ) is the other — with targeted exposure to this high tech segment of the market.

However, it would be a mistake to consider IZRL a pure tech ETF. It's got exposure to a number of areas outside of tech. According to the fund's website, IZRL will target the areas of genomics, healthcare, biotechnology, industrials, manufacturing, the internet or information technology.

Not surprisingly, the Israel equity market isn't huge, so many of the names being held by IZRL fall into the small- or micro-cap categories. I think investors need to separate the fund's two themes - innovative technology & Israel - in order to understand its potential.

We know what the U.S. tech sector has done over the past several years. It has been a steady and consistent performance leader, but the unprofitable growth segment of tech has gone bust over the past year. The Israel tech sector has underperformed the U.S. tech sector, but it's also outperformed the broader developed and emerging markets averages.

Given that IZRL also has a large allocation to unprofitable tech, it has been impacted by the recent sell-off, but it's also down a comparatively modest 26% since last year's peak.

It's the Israel market itself that I think could make IZRL a leader in 2022. Israel is a country that is woefully underweight in most major indices. This is a disadvantage because it's one of the highest potential growth areas globally today.

Israel is also experiencing an influx of venture capital investment. In 2020, Israel tech companies raised just over $10 billion in venture capital. During just the first three quarters of 2021, the group raised nearly $18 billion. Growth in this area is huge and early investors are taking notice.

Another reason why I'm intrigued by IZRL is the simple fact that it's not focused on the United States. Over the past year, the FAAMG+Tesla names have been virtually the entire focus of investors. It won't be that way forever and we've even seen this trend begin to turn in the early trading days of 2022.

If the value trade picks up momentum this year, as has often been the case in the past when interest rates are on the rise, one of the best options for finding value is in non-U.S. developed and emerging markets. Compared to the Nasdaq 100, IZRL is trading at roughly a 40% discount using metrics, such as price/sales and price/book value.

I believe that tech still makes a great long-term investment theme despite some potential short-term overvaluations. Israel is a high-tech hub that isn't properly being recognized by investors and offers a very interesting investing option today.

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