Introduction
The Jerusalem Portfolio (TJP) advocates for Israeli-focused investments.
Our Israeli asset class of choice is Equities, since over long periods of time have had significantly stronger investment performance than Fixed Income investments, which are commonly referred to as bonds. For this reason, TJP portfolio managers invest solely in stocks.
While Equities have proven to be a superior-performing asset class relative to Fixed Income investments, we do acknowledge that bonds may be appropriate for certain investors. As such, we have put together the FAQs below about Israel Bonds to assist the public in holding and managing their Israel Bonds.
What entity issues Israel Bonds?
In the United States, Israel bonds are issued by the State of Israel via the Development Corporation for Israel (DCI), which also acts as an underwriter for these securities. DCI was launched in 1951 after the Israeli government undertook a national bonds program as a strategy to secure capital from the diaspora. DCI is headquartered in New York City. Other countries have different incorporated mediums which sell Israel Bonds to investors. In Canada, bonds are sold by Canada-Israel Securities Ltd., and in Europe through the Development Company for Israel (UK) Ltd.
What is the procedure for redeeming Israel Bonds?
Once a bond reaches maturity, the holder can submit a request to redeem the bond and receive any accumulated interest. For U.S. bond holders, this is done by submitting a notarized request to Computershare, Israel’s fiscal agent based in Rhode Island, declaring intent to redeem. Holders should deliver their formal request along with a filled out W-9 Form to: Computershare, Attn: Israel Bonds, 150 Royall Street, Canton, MA 02021.
How do I sell an Israel Bond?
As explained by the Development Corporation for Israel (DCI) in their Risk Factors disclosure, one of the ways in which Israel bonds differ from other sovereign bonds is that there is no Secondary Market for them. In other words, once an investor acquires an Israel bond on the Primary Market (i.e., buying the bond from the State of Israel via DCI when the Israeli Government issues it), that investor may not trade the bond and it therefore must be held by the purchaser until maturity
Ownership of Israel Bonds can be transferred only under specific circ*mstances. Permitted transferees include immediate family members, a religious institution, or a recognized charitable cause. To make a transfer, a bond holder must issue a formal transfer request form to Israel’s fiscal agent Computershare. Note that such transfers are not considered Secondary Market transactions but merely exceptions to the blanket rule that Israel Bonds are to be solely Primary Market instruments.
Can I transfer my Israel Bonds to my personal broker account?
The State of Israel’s restrictions on transferring Bonds apply to personal brokerage accounts as well. There are several banks and wealth management firms that deal in Israel Bonds and offer their clients holdings in these securities. These entities include Citibank, Goldman Sachs, Merrill Lynch International, Deutsche Bank, Barclays Capital, Merrill Lynch, and BNP Paribas. All of these institutions have a mandate to participate in Israeli government bond auctions (this process is commonly known as the Primary Market as introduced earlier). As mentioned previously, Israel Bonds must be acquired from the outset via the brokerage. They cannot be purchased by an individual and later transferred to the brokerage account.
I lost my Israel bond certificate, what do I do?
Lost bonds can be replaced by submitting a replacement request form to Israel’s fiscal agent Computershare. A fee does apply to replacing lost Israel Bonds.
How do I buy Israel Bonds?
All first time buyers of Israel Bonds must open an account with the Development Corporation for Israel. First time buyers must register at DCI’s registration page and provide all personal identification and financial details required for regulatory purposes.
Is interest on Israel Bonds taxable?
The interest on Israel Bonds is considered taxable income just like most bond interest is considered to be. The interest will become taxable at the time the interest accrues or is received depending on the accounting methods of the holder. The Development Corporation for Israel has provided a summary of tax repercussions for U.S. holders of Israel Bonds here.
What is the phone number for Israel Bonds?
The Development Corporation for Israel’s New York headquarters can be contacted toll free at 800.229.9650. A directory list of regional sales offices in the U.S. can be seen here.
Can Israel Bonds also be considered a charitable asset class?
Israel Bonds are savings bonds similar to those issued by other governments. A person who decides to purchase an Israel Bond should view that asset solely as an investment and not as a charitable donation.
Why might my synagogue or church promote Israel Bonds?
While Israel Bonds should be considered solely as an investment asset and not a charitable one, the Israel Bonds enterprise has historically been an important source of revenue for the State of Israel. The Bonds were quite vital as a lifeline in building the country’s basic infrastructure during the country’s early days of its fledgling economy. For this reason, groups and institutions with an affinity for Israel continue to promote Israel Bonds as a way of supporting the Jewish national homeland.
Conclusion
We hope you have found the above FAQs to be helpful should you already be invested in Israel Bonds or may be considering making investments in those Bonds.
In closing, we want to emphasize that The Jerusalem Portfolio has no connection with the promotion of Israel Bonds nor the State of Israel. We present the above questions and answers for informational purposes only as a neutral third party.
