Money Market Funds in Israel Entail Halachic
by Yated Ne'eman Staff
Money market funds, that only were introduced at the
beginning of 2008, have become a solid investment preferred
by many observant investors. Until now it was assumed typical
money market funds invest only in government bonds and
unlinked short-term bonds. Other mutual funds are known hold
corporate bonds that could lead the investor to transgress
Torah prohibitions against accepting interest.
This set of circumstances has led to a situation in which
many people invest money in the money market funds without
considering whether the investment is kosher. Prospective
investors are also liable to be misled by a proliferation of
inaccurate information circulating. Money market funds are
permitted to hold a certain percentage of corporate bonds and
some funds do in fact realize this option, causing investors
to violate prohibitions related to interest.
In order to avoid these prohibitions prospective investors
should seek money market funds with halachic supervision,
just like that at other investment funds, and they should be
sure to purchase shares only in investment houses run in
accordance with halacha. There are funds with supervision of
the independent financial court run by HaRav Aryeh Dvir, and
also some with the supervision of the Eidah Chareidis.