Are Islamic Investment Funds Complicit in Financing Oppression? A Closer Look

A recent article has raised serious allegations against Islamic investment funds, claiming they indirectly finance the genocide in Gaza by holding shares in major corporations like Microsoft, Google, Amazon, Meta, and NVIDIA. Platforms such as Wahed and Amana have been specifically named, prompting a critical question: Are Muslims investing in these funds unknowingly complicit in funding oppression? This powerful claim deserves careful examination.

Understanding the Allegations

Are These Companies Actually Involved in What’s Happening in Gaza?

The claim asserts that “billions of dollars, invested through allegedly sharia-compliant funds are quietly fueling the companies enabling the genocide.” To dissect this, we must first assess the involvement of these corporations in the ongoing conflict.

Microsoft has provided cloud services utilized by the Israeli Ministry of Defence.
Google and Amazon are part of Project Nimbus, which supplies cloud and AI infrastructure to Israeli military and government bodies.
Meta has faced accusations of suppressing pro-Palestinian voices on its platforms.
NVIDIA supplies advanced chips that power Israel’s military AI systems and surveillance programs.

These partnerships are not mere conjecture; they are confirmed by the companies in public documents and press releases. Thus, it is evident that these companies have varying levels of involvement in the situation in Gaza, raising legitimate concerns about their presence in sharia-compliant portfolios.

Why Are These Companies in Halal Investment Funds?

Most Islamic investment funds do not handpick individual stocks. Instead, they track Islamic equity indexes created by third parties. These indexes apply financial and business activity screens, excluding companies involved in interest-based finance, alcohol, gambling, pork, and adult entertainment. However, they do not screen for ethical or political alignment.

This oversight allows companies like Microsoft and Google to appear in Islamic portfolios, not because fund managers endorse them, but because the screening methodology lacks consideration for political or ethical issues. This limitation highlights a significant gap in the current system, but it does not imply that Islamic funds are actively choosing to support these companies.

Why Don’t They Just Remove These Stocks?

Removing these stocks may seem straightforward, but it is much more complex in practice. The top seven technology companies in the U.S. account for about 20% of the global stock market by value. Excluding them from a fund designed to track a broad index like the S&P 500 would fundamentally alter the portfolio’s risk and performance characteristics.

Islamic funds aim to provide sharia-compliant exposure to public equities, allowing Muslims access to long-term market growth while avoiding core haram sectors. Excluding massive companies based on ethical or political criteria would necessitate a complete restructuring of the fund, which could lead to different expectations around performance, volatility, and diversification.

How Do We Define Complicity?

The global economy is intricately interconnected, complicating the definition of “complicity.” For instance, if an Israeli military unit uses Zoom for operations, does that make Zoom complicit? If a cloud provider hosts data used in drone targeting, are they responsible for its application?

Applying political or ethical filters to investing shifts the conversation from black-and-white answers to nuanced discussions about proximity, thresholds, and judgment calls. Legal and political barriers further complicate matters. In the U.S., anti-BDS laws create additional challenges, penalizing businesses that engage in boycotts of Israel. This legal pressure can inhibit companies from taking ethical stands, even if they wish to.

Does Holding Shares Mean You Are Funding These Companies?

A common misconception is that buying shares in a company like Microsoft or Amazon directly funds that company. In reality, when shares are traded on the stock market, they are bought and sold on the secondary market. This means investors are purchasing shares from other investors, not directly from the company.

While holding shares can influence demand and affect share prices, the impact of Islamic investment funds—estimated at around $200 billion globally—is minimal compared to the market capitalizations of these corporations, which are often in the trillions. For instance, the combined Islamic investment in Microsoft is estimated to be around $600 to $700 million, less than 0.03% of its total market value.

Let’s Be Honest About What Actually Supports These Companies

Ironically, one can criticize complicity using platforms hosted by Amazon, Google, or Microsoft, written in Microsoft Word or Google Docs, and on devices powered by these companies. This direct commercial relationship is more significant than holding shares through a passive equity fund, where the company receives no new capital.

While we should not dismiss the issue, it is crucial to understand the scale and mechanics of what is happening. If we adopt an all-or-nothing stance, we risk becoming impractical and ineffective.

Let’s Talk About Boycotts And How to Do Them Properly

The purpose of a boycott is to create real pressure—economically, politically, and socially. This requires focused, coordinated action from a large number of people. A successful boycott should be narrow, targeted, and strategic, rather than overly broad or vague.

BDS campaigns typically focus on a small set of high-impact targets. The goal is not to achieve 100% ethical perfection but to apply meaningful pressure where it counts.

So, What Needs to Change?

The core issue is that current Islamic equity screens are not equipped to handle modern ethical concerns. They were designed to avoid obviously haram sectors, not to evaluate human rights or political alignment.

Muslim investors are increasingly concerned not just with riba and gambling but also with the ethical impact of their capital. New indexes, products, and frameworks that integrate sharia compliance with broader ethical considerations are essential.

What Alternatives Do Muslims Have from Investing in These Funds?

If you are uncomfortable holding shares in companies linked to oppression, several alternatives exist, albeit with different trade-offs.

A) Use Tools That Help You Avoid BDS-Flagged Companies

Platforms like Zoya allow you to screen individual stocks for sharia compliance and apply additional ethical filters, including those related to BDS. However, this requires building and managing your own portfolio, which can be challenging for inexperienced investors.

Amal Invest offers pre-screened portfolios filtered for both sharia compliance and BDS alignment, making it more accessible for average investors. However, as a newer platform, it may lack the track record of more established options.

B) Invest in Alternative Private Investments

Private markets offer a wide range of halal opportunities for Muslim investors who want to align their money with their values. Options include:

Gold: A tangible asset with a long track record of holding value.
Islamic Savings Accounts: Low-risk options for growing cash without earning riba.
Sukuk: Sharia-compliant fixed income alternatives.
Real Estate: Offers potential for long-term capital growth and steady income.
Private Equity: Invest in businesses not listed on public markets.
Venture Capital: Back early-stage startups with high growth potential.

The Bottom Line

The allegations against Islamic investment funds are serious and warrant attention. While some of the world’s largest companies are indeed supporting oppression, it is crucial to differentiate between intentional support and the limitations of existing investment frameworks.

If you wish to divest, halal alternatives are available. Advocating for better screening processes is overdue, and building financial systems that reflect our values is essential. Boycotting injustice is part of our responsibility, as is creating financial systems that align with our ethical beliefs.

In the end, clarity and practicality must guide our actions as we navigate these complex issues.