The revision takes effect on 23 November and specifically targets firms generating over 5 percent of their revenue from military equipment, nuclear arms, small arms, and related contracting. This policy shift forces the fund to exit positions in major defense corporations like RTX, Honeywell International, Rolls-Royce, and BAE Systems. Additionally, surveillance specialist Palantir is expected to be removed due to its recent defense partnerships. The fund previously held $38.3 million in Palantir shares prior to these operational rule updates.
Key points
Passive investment funds tracking S&P Shariah benchmarks must conform to updated, tighter…: Passive investment funds tracking S&P Shariah benchmarks must conform to updated, tighter exclusions against weapons manufacturers starting 23 November.
Major international defense contractors supplying the Israeli military will no longer qua…: Major international defense contractors supplying the Israeli military will no longer qualify for inclusion in the Islamic equity fund.
Data intelligence and surveillance providers that contract directly with armed forces fac…: Data intelligence and surveillance providers that contract directly with armed forces face divestment under expanded military contracting definitions.
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The UK’s largest “sharia-compliant” fund is divesting from companies which take more than 5 percent of their revenue from weaponry, after Middle East Eye revealed last month that it purchased more than $100m worth of shares in companies linked to the Israeli military in the first half of this year.
The new change means the British banking giant HSBC’s Islamic Global Equity Index Fund is expected to divest from major companies including RTX, Rolls-Royce, Honeywell International, BAE Systems and Palantir.
The HSBC fund began tracking the S&P Global 1200 Shariah Select Index, a benchmark of companies screened for compliance with Islamic finance principles, in March. The fund is passively managed, which means it mirrors the index's investments.
In early November, the index updated its methodology and is set to implement the changes on 23 November. It will now exclude defence and weapons companies, military contractors and related sectors from the index.
According to the new criteria, the index will exclude companies with a more than 5 percent exposure to military contracting, nuclear weapons, depleted uranium, incendiary weapons, biological weapons and…
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