An exclusive analysis conducted by independent outlet Middle East Eye (MEE) has uncovered that the United Kingdom’s largest sharia-compliant investment fund, managed by global banking giant HSBC, acquired more than $100 million worth of shares in companies directly tied to Israel’s military operations in Gaza during the first half of 2026.
The findings build on a prior report from outlet Hyphen, which first revealed this week that HSBC’s Islamic Global Equity Index Fund had bought $38.3 million in shares of controversial U.S. technology firm Palantir — a data surveillance company already linked to enabling Israeli military actions against Palestinian civilians in the Gaza Strip.
Widely used by UK halal pension providers, the HSBC fund publicly frames its investment strategy as aligned with core Islamic finance principles, claiming it builds “portfolios underpinned by the principles of Islamic investing that deliver both investment returns and better outcomes for society as a whole.” But MEE’s review of the fund’s public semi-annual portfolio disclosures for the first six months of 2026 paints a different picture of its holdings.
According to the analysis, the single largest new acquisition by the fund was $35.7 million in shares of RTX, the world’s second-largest aerospace and defense contractor. Raytheon, RTX’s major defense subsidiary, operates a joint venture with Israeli arms giant Rafael Advanced Defense Systems to produce interceptor missiles for Israel’s Iron Dome air defense system. UK-based anti-arms trade advocacy group Campaign Against the Arms Trade (CAAT) has labeled Raytheon as a “significant supplier of missiles and other goods and services to the Israeli military” and confirmed the firm is “implicated in Israel’s war on Gaza.” The company has reportedly supplied thousands of missiles to Israel, many of which have been used in military operations that have killed tens of thousands of Palestinian civilians. It also produces key weapons systems and components for F-15, F-16, and F-35 fighter jets, all of which have been extensively deployed in Gaza. RTX did not respond to multiple requests for comment from MEE ahead of the investigation’s publication.
Beyond RTX, the HSBC fund added $20.3 million in shares of U.S. semiconductor manufacturer Analog Devices (ADI) to its portfolio. In 2024, amid Israel’s large-scale military campaign in Gaza, ADI supplied critical semiconductor components to Elbit Systems, Israel’s largest domestic weapons manufacturer that provides 80% of the Israeli military’s land-based equipment and 85% of its combat drones. In a statement to MEE, ADI noted that as a publicly traded company, its shares are traded freely on open markets, and the firm does not control the investment decisions of third-party funds. “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,” the company added.
The fund also purchased $18.9 million worth of shares in U.S. industrial conglomerate Honeywell International, which designs specialized sensors and guidance components for precision weapons. According to reporting from Al Jazeera, a Honeywell-manufactured inertial measurement unit — a component that improves targeting accuracy for missiles — was recovered from the wreckage of a missile that struck a Gaza school in June 2024, an attack that killed at least 40 Palestinians, including 14 children and nine women. Honeywell’s UK subsidiary also held three valid government export licenses to ship aircraft components to Israel between 2022 and 2023. Honeywell did not respond to MEE’s request for comment.
Another $17.6 million in new investments went to UK engineering firm Rolls-Royce, whose German subsidiary MTU produces engines for Israel’s Merkava main battle tanks — which have been heavily deployed in ground operations across Gaza — and Israeli naval vessels. In April 2025, Rolls-Royce Solutions America secured a $180 million contract as the primary supplier of engines for Israel’s new Eitan armored personnel carrier under a U.S. Foreign Military Sale agreement with Israel. A Rolls-Royce spokesperson told MEE the company does not comment on the investment decisions of third-party shareholders.
Alongside these new 2026 purchases, the HSBC fund retains a pre-existing stake in BAE Systems, the UK’s largest defense contractor, valued at $386,784. BAE manufactures key components for F-35 fighter jets, which the Israeli Air Force has used extensively in Gaza. The fund also holds shares in travel platforms Booking.com and Expedia, both of which have been named by the United Nations for listing tourist accommodation in illegal Israeli settlements built on occupied Palestinian territory.
Ibrahim Khan, co-founder of industry outlet Islamic Finance Guru, told MEE that while the fund’s investment criteria were established decades ago and cannot be revised overnight, changes are both possible and necessary given the strong ethical views of the Muslim communities the fund serves. “That is a question for HSBC to take seriously and figure out,” Khan said. He added that HSBC has a long track record of serving UK Muslim communities and their pension savings, and that while the current holdings represent a clear 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 has not issued any response to MEE’s requests for comment on the investigation’s findings.
Over the past three years, growing grassroots activist pressure linked to Israel’s military campaign in Gaza has pushed numerous large investment funds across Europe and North America to divest from companies tied to Israeli military activities. In a prior report in May, MEE revealed that Border to Coast Pensions Partnership, the UK’s largest public sector pension pool which manages roughly £120 billion ($160 billion) in assets for two million local government workers, quietly sold off all of its holdings in Israeli government bonds in 2025.