‘Sharia-compliant’ HSBC fund invests $38m in Palantir shares
Most halal pension schemes in the UK are invested in the HSBC Islamic Global Equity Index Fund, which bought the shares earlier in 2026
The major sharia-compliant fund in which most UK halal pension schemes are invested has ploughed $38m of its backers’ cash into Palantir shares — despite the firm partnering with the Israeli military during its war in Gaza.
Banking giant HSBC’s Islamic Global Equity Index Fund purchased $38,338,000 (about £29.7m) worth of shares in the US spy-tech firm in the first half of this year, its latest semi-annual report shows.
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Most sharia-complaint UK workplace pension schemes, including those run by Aegon, Aviva and Fidelity, are invested in this fund, which claims to deliver “better outcomes for society as a whole”. It comes after a 2025 investigation by Hyphen found that six Islamic investment funds, including HSBC’s, held shares worth more than $1bn in firms whose technology has reportedly helped Israel’s war effort in Gaza — meaning British Muslims have likely been unknowingly profiting from the conflict.
Afzal Khan, Labour MP and vice chair of the all-party parliamentary group on British Muslims, told Hyphen: “It is a complete affront to Islamic finance practices that the fund holds shares in a company that has actively aided the IDF [Israeli Defense Forces] in killing many innocent Palestinian civilians, including children.”
He added: “The CEO Alex Karp himself acknowledged that Palantir’s technology is being used to target Palestinians in Gaza, yet those behind the HSBC Islamic fund continue to hold shares in such an immoral company.
“They should be deeply ashamed. They should be honest with those using their service [as] to where they are investing and they should feel pressure to sell these shares to become compliant.”
Palantir signed a strategic partnership with Israel’s Ministry of Defense in January 2024 to provide it with unspecified “advanced technologies in support of war-related missions”. The US firm sells software to customers, including governments, police forces and militaries, to help them sort through large datasets — including systems that help soldiers to identify targets for military strikes, as part of what it describes as an “Al-powered kill chain”. Responding to a heckler’s claim that Palantir’s “technology kills Palestinians” during an event in 2025, Karp — the company’s co-founder and chief executive — replied: “Mostly terrorists, that’s true.”
More than 74,000 Palestinians have reportedly been killed during Israel’s bombardment of Gaza over the past three years — and a UN commission of inquiry said in June that Israeli authorities and security forces had “deliberately targeted Palestinian children resulting in genocide, crimes against humanity and war crimes” in the strip. Israel denies commiting genocide.
As of this week, halal investing apps Zoya, Musaffa and Tadabulat respectively rate Palantir’s sharia investment credentials as “questionable”, “doubtful” and “not compliant”, based on screening guidelines set by the Bahrain-based Accounting and Auditing Organization for Islamic Financial Institutions (Aaoifi), the main standard-setter for such institutions globally.
Businesses can be sharia-complaint if no more than 5% of their total income comes from sources deemed impermissible, with profits from haram sources donated to charity. But those standards focus on business activities involving alcohol, gambling, weapons and payment of interest.
This means firms engaged in business activity which Muslims may be ethically opposed to — such as partnering with an Israeli government ministry responsible for “building the strength of the Israel Defense Forces” — but whose primary business activity, such as advanced technology, falls outside of the above categories, can sometimes be deemed sharia-complaint.
Dr Farrukh Habib, a sharia scholar and financial technology expert, said: “Investing isn’t a neutral act — as a shareholder, you have some share in what the company does with your capital. So the question I’d always ask is does this investment ultimately contribute to harming innocent people, or to oppression, or to injustice?
“I’d feel genuinely uncomfortable investing in a fund that held shares in a company primarily built around surveillance or military technology — not because of where it’s based or who runs it, but because of what that technology is for.
“The Qur’an instructs believers: ‘Do not cooperate in sin and transgression.’ If a company’s core business is enabling surveillance or weapons that can be used to harm civilians, that’s a serious red flag from an Islamic finance perspective, regardless of which company or country we’re talking about. That’s an Islamic principle which we should follow.”
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After our 2025 investigation, Wahed, one of the largest halal investment platforms — which operates one of the six funds we looked into — announced it was launching two new “ethical” investment funds, to “manually screen out companies involved in human rights violations”.
In contrast, the HSBC fund is “passively managed”, meaning it closely mirrors the investments of an Islamic “parent index” — a ready-made group of stocks screened for sharia compliance by third party providers — in a process known as “tracking”. It reportedly started tracking a new parent index, the S&P Global 1200 Shariah Select Index, in March.
The HSBC fund is also overseen by a supervisory board of Islamic scholars, who publish an annual compliance report on its investments. The last such publicly available report, dated April 2025 and looking back on the 2024 calendar year, said the fund’s investments had met “Islamic investment principles” set by the scholars, and that it complied with Aaoifi standards.
Palantir is reportedly suing the mayor of London’s office after Sadiq Khan intervened to block a £50m deal between it and the Metropolitan Police, which he oversees, in May. Khan cited “serious concerns” about how the deal had been made due to an alleged “clear and serious breach” of procurement rules.
HSBC and Palantir did not respond to requests for comment.
