HSBC's Sharia-compliant fund invests over $130 million in Israeli defence-linked firms

HSBC’s Islamic Global Equity Index Fund, the UK’s biggest Sharia-compliant fund, purchased more than $130 million in shares of at least five companies connected to Israel’s military operations, including Palantir Technologies, RTX Corporation, Analog Devices, Honeywell International and Rolls-Royce Holdings. The fund’s holdings have drawn sharp criticism because they appear to violate the Islamic principle that forbids earnings from weapons-related activities.

Scholars such as Wahyu Jatmiko and Muhammed Ebrahim argue that the fund’s screening methods, which rely on sector labels rather than supply-chain analysis, allow such investments to pass as compliant. They call for stricter oversight that considers the ultimate use of a company’s products. The episode highlights broader concerns about the transparency and ethical integrity of Islamic finance instruments marketed to Muslim investors.