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Who is allowed to invest in alternative investments and how does it work?

Who is allowed to invest in alternative investments and how does it work?

Alternative investments being offered or sold to the public within the framework of a Private Offering offer many diverse and unique alternatives for wealth management but, due to their complexity and unique characteristics, the Securities Law defines criteria to ensure that investors wanting to participate in them are prepared to contend with the risks and challenges involved. Private investors who fulfill these criteria are given access to investment channels that are not available to the general public, the objective being to create balance between investment opportunities and the level of requisite knowledge and resources.

11 March, 2025

That stated in this review relates to alternative investments being offered or sold based on the exemption from the prospectus requirement prescribed in section 15A of the Securities Law of 1968, and that are not being offered or sold to the public through a prospectus that has been approved for publication by the Israel Securities Authority or in any other way (hereinafter: “Private Offering”).

Criteria for participating in alternative investments¹

In Israel, there are two main tracks enabling individual investors to participate in alternative investments that are being offered or sold within the framework of a "Private Offering":

Classified investors²

Classified investors are investors who fulfill financial requirements defined in the Securities Law, which enable them to access advanced and unique investments. The criteria for an individual investor³ include:

Liquid assets of at least ILS 9.4 million
Annual income of at least ILS 1.4 million per individual, or ILS 2.1 million per family
A combination of two of these criteria – annual income exceeding ILS 705,885 per individual or ILS 1,058,827 per family unit and liquid assets exceeding ILS 5.9 million.

Fulfillment of these criteria enables classified investors to join private funds and/or to invest in global projects and alternative assets that are not available to the general public.

Limit of 35 offerees³

The second track enables investors who do not fulfill the criteria to be considered classified investors to join alternative investments within limited frameworks. The Securities Law limits the number of unclassified investors to 35 per investment in any 12-month period, inter alia, in order to maintain balance between access to investments and investor protection.

How do I start?

If you are considering joining alternative investments, you should at least do the following:

Check your classification: Make sure that you fulfill the criteria of classified investor pursuant to the law and check whether you may participate within the 35-offeree limit.
Choose a professional management: entity Collaborating with long-standing, experienced entities with proven track records in alternative investments will ensure professional management and full transparency.
Understand the risks: Alternative assets sometimes involve limited liquidity and require long-term commitments. Completing due diligence examinations can help you understand the risks and the potential.
Adapt your strategy: Alternative investments often serve as a complementary channel to your existing investment portfolio. Examine how they contribute to achieving your financial objectives and overall risk profile.

What added value do alternative investments provide to investment portfolios?

Alternative assets are unaffected by the volatility that characterizes assets traded on a stock exchange. In fact, non-tradable assets often have very low or even zero correlation with the capital market. In other words, since they do not necessarily move in the same direction as a stock market, they may contribute to the diversification and stability of an investment portfolio over time.

Alternative investments: a significant step forward for managing family wealth

Alternative investments are suitable for investors looking to expand their financial alternatives using a professional and informed approach. Whether you fulfill the criteria to be considered a classified investor or are participating in a limited framework, these investments can offer value in terms of advanced wealth management – with correct understanding and proper planning. The changes that the traditional capital market has undergone in recent years have underscored the need to expand the current supply of investments in order to balance investment portfolios. Looking ahead, investing in non-tradable assets is perceived as an important and valuable component of investment portfolios while, of course, being diligent about conducting in-depth research and carefully scrutinizing every individual investment.

May Be Interested

The alternative investment market offers opportunities, but also poses risks, such as market risks, including exposure to foreign currencies, interest rates and global markets, operational risks, regulatory risks, limited liquidity risk, transaction complexity and limited transparency risk, which investors should take into account during investment decision-making.
That stated above includes only select general information about alternative investments and therefore, does not purport to be comprehensive or complete and should not be considered an exhaustive review of the field and/or of the risks involved therein. That states does not constitute legal advice and/or interpretation and/or a full review of the provisions of the law. When making any investment decision, investors should rely solely on their own examinations of transactions and their terms, including the advantages and risks involved in each transaction, should meticulously scrutinize all documents relevant to the transaction, and consult with their professional advisors to the extent necessary before investing. Altshuler Shaham Alternative Investments’ offers to investors from the State of Israel to invest in transactions are based on an exemption pursuant to the Securities Law of 1968 (“the Securities Law”), which prescribes that an offer and sale to up to 35 investors in any 12-month period (as specified in section 15A(a)(1) of the Securities Law and its Regulations) who are not listed in the First Addendum to the Securities Law, or to investors as stated in section 15A(a)(7) of the Securities Law and its Regulations does not require the publication of a prospectus after publication thereof has been approved by the Israel Securities Authority. In light of that stated, the investment is not regulated pursuant to the Securities Law and/or pursuant to the provisions of the Joint Investments in Trust Law of 1994. The investment and any advertising material about it have not been approved by the Israel Securities Authority.
That stated above does not constitute investment advice pursuant to the Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Law of 1995 (“the Investment Advice Law”). Altshuler Shaham Alternative Investments, its advisors and those acting on its behalf: (a) are not authorized to provide investment advice or portfolio management pursuant to the Investment Advice Law; (b) are not licensees by virtue of this Law; and (c) are not insured pursuant to the provisions of the Investment Advice Law. Any advertising information provided and any information provided regarding the possibility of investing in any future offer shall not constitute investment advice or investment marketing as defined in the Investment Advice Law.
It is clarified that that stated above in no way constitutes any undertaking to maximize any return on investment funds. Use of the above information is under the user’s sole responsibility. The above information is correct to March 2025.

1. For the full list of criteria, see the Securities Law of 1968.

2. Only one of the criteria must be fulfilled in order to be considered a classified investor.

3. The Joint Investments in Trust Law of 1994 prescribes instances whereby an additional restriction of 50 investors will be imposed.

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