Religious investors are increasingly putting their shekels and dollars into a new type of investment strategy that demands not only a monetary return but also a spiritual return. Investment funds, under the guidance of learned rabbis, are putting their cash into companies that adhere to Jewish law as well as make money.
The amount of money in “kosher investments” is estimated to be approximately $1 billion, not a significant percentage of public funds but not exactly small change.
Deputy Finance Minister Yitzchak Cohen, of the Shas party, began promoting the idea of kosher investments two years ago with the backing of leading rabbis. “We want to approve investment avenues based on values, for example, halakhic [Jewish legal] principles,” he said
Rabbi Aryeh Dvir, who heads an institute for involving business with Jewish law, told the Financial Times, "There is a growing interest inside the religious community, and on the other side there are the corporations that want to have solutions so they can have access to these new investors.”
While most investment advisors look only at earnings, dividends, management and growth rates, kosher investment funds want to know if a company violates the Sabbath, deals in leavened bread on Passover or violates Jewish dietary laws.
The largest kosher fund is run by Yaakov Moreshet, who manages nearly $200 million.
"The Halakhah [Jewish law] is very strict,” he told the Times. "I cannot invest in everything - it's a big limitation. You have to be more creative and find a solution to many problems.”
One solution is simply to buy corporate bonds outside Israel in companies that are not run by Jews. Another area of “spiritual risk” is putting money in insurance companies that allow their clients emergency services on the Sabbath, which is in violation of Jewish law unless the situation is one of life or death.
A convenient way around the prohibitions is simply to invest in time-sensitive options, which are riskier than buying into a company. Moreshet explained, "I buy the movement of the shares; I'm not their owner,''
That procedure allows him to buy options, or invest in a stock index that includes a company that might violate Jewish law, without actually owning part of the company. "I don't have an influence on the company's decisions, so there isn't a Halakhic problem here,'' he said.
Moreshet told the Bloomberg financial network that observing Jewish law in investments attracts investors. “Most people believe there is a G-d and they like tradition,'' he said. "They want to be able to get a day of rest. Otherwise we all go back 2,000 years to the epoch of slavery.''
However, the bottom line still is money. Even if the company observes Jewish laws, if it does not promise a good financial return, it is not "kosher" in terms of investment appeal.