HSBC reviews Palantir holding in $9bn Islamic fund
UK workplace pension schemes raise concerns about inclusion of controversial company in fund tracking S&P Shariah index
HSBC Asset Management is reviewing whether to exclude Palantir from its $9bn Islamic Global Equity Index fund after some of the UK’s biggest workplace pension schemes raised concerns about its investment in the US software company.
The UK’s state-backed workplace pension scheme Nest and People’s Pension, a scheme with more than 7mn members, raised concerns with HSBC over Palantir’s inclusion, according to people familiar with the situation.
In the first half of the year, the HSBC fund, which tracks the S&P Global 1200 Shariah Select Index, purchased $38.3mn worth of Palantir shares.
Nest had about 40,000 members invested in the fund and had received a “small handful of inquiries” about Palantir’s inclusion, one of the people said.
The technology company is controversial due to its ties to the US and Israeli defence industries, and has faced a backlash in Europe with government agencies in Switzerland, Germany and France rejecting or replacing its tools.
Earlier this year, London mayor Lord Sadiq Khan blocked its £50mn contract with the Metropolitan Police, although the mayor’s office clarified the decision was not due to the company’s “values or ethics”.
Sharia-compliant funds follow the principles of Islamic law and Islamic ethics, which can restrict the type of companies in which a fund can invest. However, differences between the constituents of benchmark indices can mean funds end up holding a wide range of investments.
HSBC switched the index tracked by its Islamic Global Equity Index fund from the Dow Jones Islamic Market Titans 100 Index in March.
“Senior executives at pension scheme Nest have begun discussions with HSBC Asset Management following queries about Palantir’s inclusion,” Nest said. The People’s Pension has also contacted the asset manager, according to people familiar with the matter.
HSBC said that it would “assess whether the approach still meets investors’ expectations”.
“We understand how important it is that funds like this reflect the values of those who invest in them. We take any concerns from our clients seriously and will review this matter carefully,” HSBC added.
Umer Suleman, who sits on the board of Islamic Finance Council UK, said he had been approached by several investors in the fund who had expressed “genuine outrage and shock” over Palantir’s inclusion in the HSBC fund.
Palantir did not immediately respond to request for comment.