HSBC's 'Sharia-Compliant' Fund Bought $100M-Plus in Shares of Firms Supplying Israel's Military

HSBC's Islamic Global Equity Index Fund, the UK's largest sharia-compliant fund and the default holding for most British halal pension schemes, purchased more than $100m in shares of five companies with documented links to the Israeli military during the first half of 2026, according to a Middle East Eye analysis of the fund's semi-annual report.

The fund bought $35.7m in shares of RTX, the world's second-largest arms company. Its subsidiary Raytheon works with Israeli arms maker Rafael to produce interceptors for the Iron Dome system. The Campaign Against the Arms Trade has described Raytheon as a "significant supplier of missiles and other goods and services to the Israeli military" that is "implicated in Israel's war on Gaza." RTX did not respond to MEE's request for comment.

The fund also purchased $20.3m in Analog Devices, a US semiconductor maker that sent components to Elbit Systems, Israel's largest weapons manufacturer, during 2024. Elbit supplies roughly 80 percent of the Israeli military's land force equipment and 85 percent of its combat drones, according to MEE. Analog Devices told MEE it does not direct fund investment decisions and that its products are sold worldwide subject to export control laws.

A third holding, $18.9m in Honeywell International, ties the fund to a company whose inertial measurement unit, used for precision targeting, was found in a missile that struck a school in Gaza in June 2024, according to Al Jazeera. That strike killed at least 40 Palestinians, including 14 children and nine women. Honeywell's UK arm received three export licences for aircraft components to Israel in 2022 and 2023. Honeywell did not respond to a request for comment.

The fund bought $17.6m in Rolls-Royce, which produces engines for Merkava tanks and, through German subsidiary MTU, Israeli naval vessels. In April 2025 a Rolls-Royce unit became principal contractor on a $180m Foreign Military Sale to supply engines for Israel's Eitan armoured carrier. A company spokesperson told MEE it would not comment on investor actions.

The largest single purchase, $38.3m, went to Palantir, the US data firm that announced a 2024 partnership with Israel's Ministry of Defence to support what it called "war-related missions" using drone-fired missiles in Gaza. In April 2025, Palantir chief executive Alex Karp responded to accusations that the company's technology had enabled Palestinian deaths by saying those killed were "mostly terrorists, that's true."

"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."

That finding comes from UN Special Rapporteur Francesca Albanese's July 2025 report. Palantir has won more than £670m in UK civil and defence contracts since 2020.

The fund also holds a pre-existing $386,784 stake in BAE Systems, Britain's largest arms company and a manufacturer of F-35 components used in Gaza operations.