HSBC Asset Management is reviewing its investment in Palantir Technologies within its $9 billion Islamic Global Equity Index fund following concerns raised by major UK workplace pension schemes. Nest, the state-backed pension scheme, and People’s Pension, which serves over 7 million members, have both questioned the inclusion of Palantir due to the technology company’s business connections.
The HSBC fund, which tracks the S&P Global 1200 Shariah Select Index, acquired approximately $38.3 million of Palantir shares during the first half of the year. Nest, with around 40,000 members invested in the fund, has reported receiving a small number of inquiries regarding Palantir’s presence, prompting senior executives to engage in discussions with HSBC Asset Management. People’s Pension has also contacted the asset manager to express reservations.
Palantir is a US-based software firm that has drawn scrutiny because of its involvement with the defense sectors of both the United States and Israel. This has contributed to a backlash in parts of Europe, where government agencies in Switzerland, Germany, and France have either rejected or discontinued the use of Palantir’s technology. Earlier this year, London Mayor Sadiq Khan blocked a planned £50 million contract between Palantir and the Metropolitan Police. However, his office stated that the decision was unrelated to concerns about the company's values or ethics.
Sharia-compliant funds like HSBC’s Islamic Global Equity Index seek to adhere to the principles of Islamic law and ethics, which often lead to restrictions on investing in certain types of companies. Despite this, differences between the benchmarks used can result in a broad variety of holdings within such funds. HSBC made a notable change in March when it shifted the index that the fund follows from the Dow Jones Islamic Market Titans 100 Index to the S&P Global 1200 Shariah Select Index.
HSBC Asset Management acknowledged the importance of ensuring that its funds reflect investors’ values and said it is cooperating with independent experts to carefully review the matter. The firm committed to conducting the review promptly and communicating any resulting decisions to its customers.
Umer Suleman, a board member of the Islamic Finance Council UK, noted that he has been approached by several investors who expressed strong disapproval of Palantir’s inclusion in the HSBC fund, describing their reactions as “genuine outrage and shock.”
Palantir did not respond to requests for comment regarding the review. The outcome of HSBC’s reassessment could lead to changes in the company’s inclusion in Sharia-compliant investment products.