Halal or Tayyib? Rethinking UK Islamic ETFs

A closer look at where British Muslim investment capital actually flows.

The UK has never really let go of its colonial tendencies. Part of the US‑led imperial architecture, it is as committed to supporting depravity outside of its borders as it is to suppressing its own citizens. At this time, the state is about to cause the deaths of Palestine Action prisoners for their crime of humanity.

What has been the Muslim response to the slow, torturous execution of these brave defenders of the defenseless? Have British Muslims in particular mounted anything resembling meaningful resistance to this state terror?

At the very least, we must ask if individually we are doing the bare minimum of withdrawing our capital from the economic structures that sustain injustice at home and abroad. Tayyib investors should lead by example.

Mainstream Islamic toolkit sold in the UK

As far as equities are concerned, Islamic investment options local to the UK extend, beyond individual stock picking, mainly to halal funds from HSBC and iShares. These tend to make up the bulk of individual savings accounts and pensions held by British Muslims. And they are all highly problematic, some more than others.

1. Islamic equity fund from HSBC

HSBC’s flagship offering, the HSBC Islamic Global Equity Index Fund, comes in different share classes and is accessible through multiple wrapper/feeder structures. The fund tracks the Dow Jones Islamic Market Titans 100 Index whose top 10 holdings (accounting for more than 50% of the portfolio) are the familiar US mega-caps — from NVIDIA, Microsoft and Amazon to Alphabet, Meta and Tesla — embedded into US and Israeli infrastructure, militarily or otherwise.

2. Islamic equity funds from iShares

iShares offers a somewhat wider range, spanning the global iShares MSCI World Islamic UCITS ETF (ISWD), the US-focused iShares MSCI USA Islamic UCITS ETF (ISUS) and the emerging markets iShares MSCI EM Islamic UCITS ETF (ISDE). As the names suggest, these funds are built around corresponding MSCI Islamic indices:

• The MSCI World Islamic Index focuses on developed countries, so it ends up as the same US-heavy mix of apartheid-enabling companies loyal to the imperialist enterprise, including a number of major fossil firms.

• The MSCI USA Islamic Index has a US-only focus with concentration in tech, healthcare and consumer names, hence holdings like Microsoft, NVIDIA, Amazon, Meta and big pharma partial to the zionist agenda.

• The MSCI Emerging Markets Islamic Index is heavier Asia, but that is no automatic pass: it is also heavy in dirty energy and carries large exposures to traitorous GCC regimes such as Saudi Arabia and the UAE.

A note on fund managers

On top of these supposedly halal funds being deeply un-Islamic from a tayyib perspective, another reason why they should be avoided is their fund management. Both HSBC and iShares are themselves part of the problem, so funnelling Muslim money through these institutions makes little sense.

Although HSBC divested from Elbit Systems, the foremost military contractor to the IDF, it continues to fund other companies like Caterpillar linked to Israel’s war machine as well as those operating in illegal Israeli settlements.

iShares, in turn, is owned by BlackRock, one of the world’s biggest owners of arms manufacturers, genocide-enabling tech firms and fossil fuel majors. Led by Larry Fink, a staunch zionist, BlackRock is also a big investor in Israel.

Individual problematic UK stocks

As for individual British stocks often labelled Shariah-compliant by mainstream screens, most sit within the UK’s arms-war-climate nexus. Carbon majors BP and Shell profit from war-driven oil price spikes and, alongside their US counterparts, supply to Israel, including its armed forces. BAE Systems is the principal listed weapons company arming Israel; of course, the wider UK arms ecosystem involves many more firms with local sites, like Elbit subsidiaries and Teledyne plants.

Takeaway

At a compliance level, these halal UK ETFs — like the other Islamic ETFs I looked at before — may pass the standard checks. But from a tayyib standpoint, they fail on two counts. First, their portfolios are chock-full of companies facilitating apartheid, modern day imperialism and environmental collapse. Second, their managers are deeply entangled in the political economy that enables these crimes.

When a Muslim investor buys ISWD or ISUS, not only are they exposed to controversial holdings inside the ETF, they also pay fees to a manager scaling the very portfolios the ummah is supposed to be defunding. Muslim and all conscientious investors should favour values‑aligned managers — or pursue direct stock picking using Islamic indices as a starting universe, combined with the suggested tayyib screen or their own.

Here is a basic guide to halal stock picking:

Feel free to browse through the archives of Tayyib Finance for halal investment alternatives that have been previously covered.