Can You Invest in Middle East Peace?
G. Jeffrey MacDonald, The Christian Science Monitor
As winds of change sweep the Middle East, brave investors are exploring how capital might help encourage reforms.
They're discovering a landscape dotted with unique risks and niche opportunities: ways to invest in Israel, the Palestinian territories, and even in the hiring and promoting of women (although not specifically focused on that area of the world). The questions for individual investors: What's my vision for progress in the Middle East? Do I have the wherewithal and risk tolerance to invest?
"The Middle East is really hard to work in, and has all sorts of risks," says Jim Pickup of the Middle East Investment Initiative, a nonprofit in Washington that aims to boost business financing in the Palestinian territories. "To get a social return as well as a risk- adjusted return has been a real challenge."
Some agendas are easier to support through investing than others. Pro-Israel holdings are the most accessible to Westerners. Bonds to pay for Israeli infrastructure projects, such as expanded ports, are available with a few clicks at israelbonds.com. Also, there's Timothy Israel Common Values Fund, a year-old mutual fund weighted toward Israel's strongest sectors, such as technology and health care, as well as real estate.
Investors in the fund "bless ... the only real ally we [Americans] have in the Middle East," the fund says. But it's not for the faint of heart. Israel-focused funds "tend to be risky [since] Israel is inextricably tied to geopolitics in the region," says David Kathman, a Morningstar analyst. By mid-December, the fund was up 8 percent versus its benchmark (up 13.7 percent) and its category (up 18.7 percent).
Providing direct investment for Palestinians is harder since their economy is less developed than Israel's. Institutional investors have put money into private equity funds and venture capital projects, which require more cash than ordinary investors usually have. …