HSBC ‘sharia‑compliant’ fund spent over $100m on five Israeli military‑linked firms
The UK’s largest “sharia-compliant” fund has purchased more than $100m worth of shares in companies linked to the Israeli military in the first half of this year, a Middle East Eye analysis can reveal.
This comes after Hyphen reported on Tuesday that the British banking giant HSBC’s Islamic Global Equity Index Fund purchased $38m worth of shares in the controversial American technology firm Palantir.
Most halal pension schemes in Britain are invested in the HSBC fund.
MEE’s analysis of the Islamic Global Equity Index Fund’s activities in the first half of 2026, detailed in its semi-annual report, has established that the fund purchased $35.7m worth of shares in RTX, the world’s second-largest arms company.
Raytheon, an RTX subsidiary, is engaged with Israeli arms giant Rafael to produce interceptors for Israel’s Iron Dome missile defence system.
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Raytheon has been described by Campaign Against the Arms Trade (CAAT) as a “significant supplier of missiles and other goods and services to the Israeli military” and as “implicated in Israel’s war on Gaza”.
The company has supplied thousands of missiles to Israel, including ones reportedly used in its genocide in Gaza. Raytheon also provides weapons systems and components to F-15, F-16 and F-35 fighter jets, which have been deployed in the Palestinian enclave.
RTX did not respond to MEE’s request for comment.
The HSBC fund also purchased $20.3m in Analog Devices shares, a US semiconductor company which sent critical components to Elbit Systems, Israel’s largest weapons manufacturer, in 2024 during Israel’s genocide in Gaza.
Elbit supplies the Israeli military with 80 percent of the Israeli military's land force equipment and 85 percent of its combat drones.
Analog Devices Inc (ADI) told MEE: “As a publicly traded company, ADI's shares are bought and sold on the open market, and ADI does not direct or control the investment decisions of any fund.
“ADI's products are sold worldwide for a broad range of applications, and all of our sales are subject to U.S. and other applicable export control and sanctions laws, including government licensing requirements where they apply.”
Honeywell unit found in missile that killed Gaza children
The HSBC fund also purchased $18.9m worth of shares in Honeywell International, a US conglomerate which designs sensors and guidance devices used in weaponry.
Honeywell manufactured an inertial measurement unit - used to aid precision targeting - which was found in a missile that attacked a school in Gaza in June 2024, according to Al Jazeera.
The attack killed at least 40 Palestinians, including 14 children and nine women.
Honeywell’s UK business had also received three licences to export aircraft components to Israel in 2022 and 2023.
Honeywell did not respond to MEE’s request for comment.
The HSBC fund further purchased $17.6m worth of shares in Rolls-Royce, which produces engines for Merkava tanks, used extensively by Israel in Gaza, as well as Israeli ships through its German subsidiary MTU.
In April 2025, Rolls-Royce Solutions America became the principal contractor to supply engines for the Israeli armoured troup-carrier Eitan APC in a $180m “Foreign Military Sale” to Israel.
A Rolls-Royce spokesperson told MEE the company would not comment on the actions of investors.
Hyphen reported on Tuesday that HSBC’s fund purchased $38.3m worth of shares in Palantir.
Since 2020, Palantir, the US data surveillance firm with links to Israeli abuses in occupied Palestine, has won over £670m in contracts with British civil and defence sectors.
In January 2024, Palantir announced a partnership with the Israeli Ministry of Defence to deploy its technology in support of “war-related missions” that use drone-fired missiles to target civilians in Gaza, including journalists and aid workers.
In April 2025, Palantir's chief executive Alex Karp responded to accusations that Palantir technology had enabled the killing of Palestinians in Gaza by saying “mostly terrorists, that’s true”.
A report produced by UN Special Rapporteur Francesca Albanese in July 2025 said there "are reasonable grounds to believe Palantir has provided automatic predictive policing technology, core defence infrastructure for rapid and scaled-up construction and deployment of military software, and its Artificial Intelligence Platform, which allows real-time battlefield data integration for automated decision-making".
'Criteria can and should be changed'
HSBC’s sharia‑compliant fund also holds a pre‑existing stake in BAE Systems - valued at $386,784 - Britain’s largest arms company, which manufactures components for F-35 fighter jets. F-35s have been used by the Israeli military in Gaza.
The fund further holds shares in Booking.com and Expedia, both of which have been named by the United Nations as listing properties in illegal Israeli settlements in occupied Palestinian territory.
"The criteria for these funds were set a long time ago and it's not straightforward to change them overnight,” Ibrahim Khan, co-founder of the popular Islamic Finance Guru website, told MEE.
“But it is also the case that these criteria can and should be changed, particularly if the community that they are serving believes very strongly in certain things. That is a question for HSBC to take seriously and figure out.”
Khan added: "HSBC has been serving the Muslim community and our pensions for the last couple of decades through this fund. We can't then throw the baby out with the bathwater because they've misstepped on this - and it is a misstep.
"It is right that we put pressure on them and demand better, but also that we deal with them in a fair way."
HSBC did not respond to MEE’s request for comment.
Many funds have been seeking to disentangle from Israel in the face of significant pressure by activists over the past three years, as a response to Israel’s genocide in Gaza.
MEE revealed in May that the UK’s largest public sector pension pool, Border to Coast Pensions Partnership, quietly sold its holdings of Israeli government bonds last year.
Border to Coast manages nearly £120bn ($160bn) in assets on behalf of around two million people working in local government.
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