Sure it helps Israel. But Israel Bonds might also just be that very special instrument to add to a fiscally sound investment portfolio.
After facing last summer’s constant barrage of rockets from Hamas terrorists in Gaza, Israel’s economy is proving just as dependable as the much-acclaimed Iron Dome missile defense system, helped in part by capital investments made internationally through the work of organizations like Israel Bonds.
A product of the Development Corporation for Israel, an American-run brokerage and retail firm, Israel Bonds has long been a financial boon for the Jewish state’s economy. Now, the bonds are increasingly seen by both individuals and institutions as a sound investment, not just a charitable gift — on par with or better than sovereign debt securities of other well-known, financially stable countries such as the United States, Canada, Australia and European Union member states.
Israel’s dynamic economy and excellent credit rating had made even non-Jewish investors take notice, leading to vastly improved sales of Israel Bonds over the past couple of years.
“At the end of the day, we’re a brokerage firm with a Jewish heart,” said Izzy Tapoohi, president and chief executive officer of Israel Bonds.
“Yes, we do have a Jewish community backing us and investing, knowing that it’s a good investment, but we shouldn’t forget that at the end of the day, if there was a crisis in Israel and we were sitting in bomb shelters, the only place that Israel can go to insure that its economy would survive would be to come to Israel Bonds.”
Israel Bonds is constantly working in the market, whether there is a crisis or not, to impress on investors the new face of the Israeli economy, and subsequently, its bonds appeal to younger investors who are more interested in making a good, secure, diversified investment, than in the traditional pull of patriotism and sentimentality — though belief in Israel is still a motive for investment.
Harold F. Marcus, who serves as Pennsylvania executive director for Israel Bonds, addressed the financial instrument’s worthiness for portfolios by pointing to information in the company’s corporate brochure that explains how “available terms and features for fixed and floating rate issue bonds provide options when planning for financial goals, including portfolio diversification, protection from market fluctuations and retirement.
“Israel Bonds can be found in the portfolios of a wide range of investors. Stakeholders in Israel’s economy include individuals, over 80 state and municipal funds, unions, universities, foundations, corporations and financial institutions.”
Tapoohi, the CEO, said there is a generational difference. “If you look at the older generation, obviously even if they got negative 30 percent, they would be investing in Israel Bonds and in Israel” anyway. When you look at the younger generation, the 35-45 year-old range, “they see that it is a good investment, with reasonable return, with the principle and interest always paid on time.”
Last year, Israel Bonds received its largest-ever single investment when the state of Ohio — and its Jewish state treasurer, 36-year-old Josh Mandel — completed a $47.8 million investment. This sum, added to the $42 million investment Mandel made in 2013 on behalf of Ohio as well as the state’s previous investments, brings the Ohio Treasury’s total Israel Bond holdings to $105 million.
“This purchase is consistent with our strategy of making sound investments that prioritize the safety and security of Ohioans’ hard-earned dollars,” Mandel told the Cleveland Jewish News. “Just four years ago, Ohio’s fiscal condition was ranked 43rd in the nation — and today we’re ranked seventh.
“This improvement in Ohio’s financial health has been a team effort, and I’m proud to be doing our part from the state treasurer’s office.”
Mandel’s move was supported by Ohio’s state legislature and is the largest Israel Bonds holding by any U.S. state.
Despite the instability that surrounds the Jewish state in the Middle East region, Israel Bonds has seen positive momentum over the past number of years. A record was set in 2013 when its total annual domestic bond sales topped $1.079 billion, “refuting the perception that Israel bonds only sell well in times of crisis,” a company fact sheet says.
As an investment firm, Israel Bonds has tried to shed its image as a charity, not wanting to take money away from actual charities, and looking to be taken seriously by major investors.
Stuart Garawitz, corporate vice president and head of national sales at Israel Bonds, said a critical part of this move was modernization of its business model.
“For the first time ever, you were able to buy bonds online, and,” in 2013, “we sold $25 million of bonds online when three years ago it was zero,” Garawitz said. “Zero to $25 million is pretty amazing.”
This article originally appeared in the special section, "Financial Health."