Halakhic Portfolio

Overview

Halakhic law is the body of religious law practiced by Orthodox Jews. This law includes substantial areas of monetary law according to which Jews should conduct their interpersonal and commercial dealings. In addition, it includes many statutes whose spiritual significance and import may not be so readily apparent. The Bais HaVaad Halacha Center provided guidance on where Halakhic Law should influence investment choices. The Magni Halakhic Portfolio was constructed, and is maintained, under the guidance of the Bais HaVaad in order to assure ongoing compliance with Halakhic law and the values that emanate from Halakha.

Investment Process

From the perspective of investing, Halakhic law defines improper behavior and companies engaging in improper behavior, such as manufacturing or distributing immoral material; idols for worship; and recreational drugs. It is also praiseworthy to avoid certain other activities, such as lifnei iveir, ribbis, issurei hana’ah, and sechora b’ma’achalos asuros. Based on the research and guidance of the Bais HaVaad Halacha Center, Magni identified 15 topics to apply to portfolios as well as whether the topics should be implemented as a negative or positive screen.

Negative Screen – A negative screen means that the activity is unacceptable, and any company involved in the activity should not be eligible for investment (e.g., a company that produces lewd content). Any companies identified by the negative screen will not get an allocation within a Halakhic portfolio.

Positive Screen – This screen pertains to companies that are ruled Halakhically compliant (i.e., meaning no need to exclude) by leading Halakhic authorities. A positive screen reflects the degree of a company’s behavior consistent with the topic’s Halakhic standard, and the values that emanate from that standard (e.g., unethical business practices). A company that is more deeply compliant with its topic’s respective Halakhic standards will receive a larger allocation. Just as there are degrees of compliance from minimum to maximum in ritual matters such as kashrut (religious dietary laws), the same holds in monetary and financial Halakha as well.

Halakhic Law on Investing

Below are the 15 topics derived from the research of the Bais Havaad Halacha Center. Between ‘improper behavior’ and ‘praiseworthy to exclude,’ each topic has been broken down into objective factors to determine which companies should be excluded from the Halakhic portfolio.

Improper behavior

  1. Jewish ownership of a company carries specific responsibilities
  2. Pornography
  3. Prurient interests
  4. Abortion
  5. Firearms for private purchase
  6. Idols
  7. Recreational drugs, including marijuana
  8. Restrict religion

Praiseworthy to exclude

  1. Stumbling block / Lifnei Iveir
  2. Ribbis
  3. Chometz on Pesach
  4. Grapes
  5. Dairy and meat
  6. Forbidden meat
  7. Unethical practices

Protection for Orthodox Jewish Investors

As part of investing in a Halakhic portfolio, the client will be offered a Halakhic Investment Agreement developed by the Bais HaVaad in consultation with major poskim. This agreement handles ribbis issues and takes into account the most stringent opinions. In addition, a comprehensive “sale of chametz” agreement has also been developed by the Bais HaVaad in consultation with major poskim, and is available with these portfolios.

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