Miami Jewish Federation eyes investments in Israel

The Jewish Federation of Greater Miami has a plan to infuse Israel’s economy with tens of millions of dollars from the investment funds and endowments of the various federations, trusts and charities that constitute the organized American Jewish community.

Over the past several years, Miami Federation President Jacob Solomon has been putting together a plan to tap into the more than $15 billion held by the various investment funds belonging to the regional organizations that constitute the Jewish Federations of North America as well as the additional $60b. that Solomon says are held by “Jewish private foundations” around the US.

Speaking with The Jerusalem Post on Thursday, Solomon noted that he is working with Steven A. Schoenfeld, the founder of BlueStar Global Investors, a financial services firm focused on Israeli markets, to make this dream a reality.

There has been “lots of interest,” Solomon said.

“There are two or three other significant federations that are very interested in this and they are doing their due diligence.”

At the JFNA’s 2013 Investment Institute in Palm Beach in February, representatives of 60 communities and 15 local Investment Committee chairpersons discussed how to maximize returns on the “more than $13.5b. in assets” that the federations currently have in their endowments.

According to the JFNA, “over $64b. in Jewish communal philanthropic assets” were represented at the gathering.

In a letter to investment managers who attended the Investment Institute, President Shimon Peres noted that “Israel is today recognized as a start-up nation, well-renowned for its breakthrough innovations and achievements in the field of hi-tech. Its business environment, reservoir of high-level human resources, creativity and innovative approaches presents attractive investment opportunities waiting to be tapped.”

The president stated that he hoped to see “a surge of JFNA foundation investments in Israel soon.”

Alon Ozer, the chief investment officer for the Miami federation, who pushed Israel investments and BlueStar at the Investment Institute, noted that for more than two years “the Greater Miami Jewish Federation has been working to make a case among Jewish federation endowments for investing in Israel as part of their investment policy. This includes sessions at the JFNA General Assembly for the last few years and also at the last two JFNA Investment Institutes.”

In 2010, he noted, “Miami’s Investment Committee challenged itself to incorporate a strategic Israeli investment that would expand on its current holdings. This allocation would have to be based on rigorous empirical research that demonstrated that an Israel equity investment is financially prudent and can improve a portfolio’s risk/return profile.”

Such investments, he noted, can serve “as a tangible counter-response to the boycott, divestment and sanction movement against Israel.”

At the Institute, Schoenfeld addressed delegates of the financial arm of organized American Jewry during a panel on “High Tech and Beyond: How Best to Benchmark Israeli Investing,” and appealed for smart investing in the Jewish state that is not based on the concept of tzedaka, or charity, but rather on smart investing.

Solomon said that after Schoenfeld approached him and Ozer, the federation decided to collaborate with BlueStar, whose “goal ultimately is to develop an index fund for people, and more importantly for institutions, endowments, banks, pension funds and states and governments to invest in Israel in a way that is related to equities, related to the startup nation.”

Reiterating that investing in Israel is a “good investment,” Solomon explained that no matter how Zionist federation investment officials may be, they are forced by the nature of their positions to maximize revenue for their employers and that investments are driven less by ideology than by pure numbers.

“We can love Israel all we want but investment committees are paid to have blinders on in terms of their emotions,” he said.

However, Solomon asserted, Israel’s economy has made the country an attractive investment destination due to “the dramatic and extraordinary rise in the value of corporations in Israel over the last decade.

We want to have investments, and we invest in Israel Bonds as well, but our international equities, we would like to find a way to invest in Israeli companies, it’s consistent with our vision but it’s also smart business.”

Given the complex realities that govern investments for large Jewish endowments, Solomon stated “most institutional investors are not picking stocks, they are investing in funds that are managed and those do the stock picking.” As such, the federations require “a fund that we could invest through and that fund then chooses” in which Israeli companies to invest.

Schoenfeld, who in 2011 founded such an index fund, BlueStar, has been working with the Jewish Federation of Greater Miami, which has “already endorsed this in principle,” setting aside a portion of its endowment for investments in Israeli companies.

While one adviser to Peres told the Post that that at least $15b. will be invested in Israel, Solomon is a little more down-t-earth in his projections.

“I think that certainly tens of millions is extremely plausible,” Solomon said.

“We would put a portion of our international equity asset class into” BlueStar’s index, and, “I’m sure the other federations would do the same thing.”

Schoenfeld said that he believes that Israel may see “something around $100 million in the long term.” However, he cautioned, “it’s not going to happen all at once.”

It is ironic, he noted, that “if a Jewish organization looks deeply into its portfolio right now they have more money in countries that hate Israel than they do in Israel. I am trying to correct that anomaly.

This idea makes sense not because of Zionism but capitalism.”