Islamic Funds Monthly Market Overview - July
Monthly Market Overview - Equities
- Global equities were marginally down, with returns broadening beyond tech. Europe led developed markets as falling oil prices eased inflation concerns, while expectations of higher ECB interest rates supported key sectors such as financials. After a sharp rally in semiconductor and AI stocks over the prior two months, AI sentiment cooled in June—most notably among mega-cap technology—amid concerns about the sustainability of big tech margins and the rising cost of the AI buildout
- In the Middle East, early-month escalation gave way to a more positive tone after a memorandum of understanding (MOU) between the US and Iran and the reopening of the Strait of Hormuz reduced near-term risk. Emerging markets underperformed developed markets, weighed down by volatility in AI-linked semiconductor and memory stocks
- Within Islamic global equities Technology was the largest detractor, while Health Care contributed. Region wise, North America weighed on performance during the month, while EMEA and Asia contributed. Within specific stock names, Microsoft, Broadcom and Amazon.com detracted from performance while Applied Materials and Micron Technology drove performance
- Within Islamic EM equities, South Korea contributed the most to performance. IT drove performance from a sector perspective, while Materials were a drag on returns. Within specific securities, SK Hynix and Samsung drove returns, while Delta Electronics and Hon Hai Precision weighed on performance
Chart 1: 1 Year Fund performance (Gross of fees)
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Past performance does not predict future returns. Source: Bloomberg, LSEG Refinitiv, HSBC Asset Management as of 30 June 2026. Past performance is shown gross of fees, meaning any potential returns will be reduced by the deduction of investment management fees and any other expenses incurred. Returns denominated in USD and may vary with fluctuations in the exchange rate. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector or security. Shariah investment restrictions may result in the funds performing less well than funds with similar objectives which are not subject to these restrictions. The views expressed above were held at the time of preparation and are subject to change without notice
Fixed Income / Sukuk
- Across global fixed income markets, global bond markets traded without a clear direction as investors assessed how energy-price volatility might feed through to inflation expectations and growth. Government bonds longer dated bond yields remained elevated on persistent inflation pressures and uncertainty. Yields remain elevated amid spiky inflation, geopolitical risks, and a hawkish pivot by central banks. But this has improved the income opportunities across fixed income, which could add ballast to portfolio returns. Investment grade credit spreads remain tight amid robust fundamentals. High yield credit faces pressure from uneven US growth and geopolitics
- The US 10-year Treasury rose over the month by 3bps at 4.47 per cent in June, the German Bund fell by 8bps to 2.86 per cent and the UK 10-year Gilt also fell by 5bps to 4.76 per cent. Investment grade global corporate spreads widened by 2bps at 0.78 per cent, global high yield corporate spreads widened by 3bps to 2.80 per cent
- The FTSE IdealRatings Sukuk Index holds investment grade Sukuks, with an average coupon of 4.70 per cent and average maturity of 5.87 years. Top exposures are to Saudi Arabia, UAE and Indonesia
- Sukuk issuance continues to be positive in 2026
- Sukuk issuance continues to grow steadily, signalling growing interest in the asset class. Issuance growth rates are expected to moderate this year as investors keep a close eye on developments on the Middle East war
Chart 2: Country exposure (Top 5)
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Chart 3: Market Value continues to grow
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Commodities
- In commodity markets, Brent crude fell nearly 20 per cent after the US–Iran MOU and the reopening of the Strait of Hormuz eased concerns over potential energy supply disruptions. Gold extended its decline for a fourth consecutive month, pressured by a stronger US dollar and more hawkish interest rate expectations
Currencies
- The US dollar strengthened against both Sterling and the euro, supported by resilient US economic data and signs the Fed may keep rates higher for longer. Ongoing concerns about slowing growth and higher inflation in the Eurozone weighed on the euro, while domestic political uncertainty pressured Sterling
Past performance does not predict future returns. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector or security. The views expressed above were held at the time of preparation and are subject to change without notice. Shariah investment restrictions may result in the funds performing less well than funds with similar objectives which are not subject to these restrictions. Index returns assume reinvestment of all distributions and do not reflect fees or expenses. You cannot invest directly in an index.
Source: Bloomberg, LSEG Refinitiv, HSBC Asset Management as of 30 June 2026.
Multi Asset Investment Team Views and Portfolio Positioning
- Outlook: The US–Iran Memorandum of Understanding (MOU) has helped ease geopolitical tensions. Oil prices have fallen and supply constraints in non-oil commodities have also eased, reducing tail risks to global growth and inflation. However, the outlook remains fluid, as the MOU is an interim agreement rather than an enduring settlement
- Our baseline scenario is that US growth becomes more balanced and returns closer to its long term trend, bringing it more in line with other major economies. This should support a convergence in global growth, helped by strong corporate profits boosting non‑tech investment and lower energy prices supporting consumer spending. Policy uncertainty remains elevated, but we do not expect a sharp slowdown as investment in AI-related capital expenditure continues to provide strong support
- Portfolio Positioning: We are cautiously optimistic on the US-Iran ceasefire progress, as shipping through the Strait of Hormuz is slowly normalising and oil prices have fallen sharply. Strong corporate profits, ongoing AI investment, government spending and deregulation all remain supportive for markets. This is also reflected in our recently improved equity signals. As a result, we increased equity exposure to move overweight over the month
- During June, we also moved underweight gold, as our tactical signals are supporting this view following the underperformance in the precious metal this year. We remain overweight emerging markets equities, where the region remains supported by improved financial conditions and the continued strength in part of the Asian technology markets (e.g. Korea, Taiwan). We remain underweight Europe, due to sentiment being weighted by weak economic data, higher energy prices and likelihood of rate hikes
- Over the month we also increased our overweight to Japan, where we remain focused on its resilient economic and profits growth, and the potential for fiscal stimulus to further boost the economy
HSBC Islamic Product Suite - Returns (Gross of Fees per cent)
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Past performance does not predict future returns. For informational purposes only and should not be construed as a recommendation to invest in the specific country, product, strategy, sector or security. The views expressed above were held at the time of preparation and are subject to change without notice. Past performance is shown gross of fees, meaning any potential returns will be reduced by the deduction of investment management fees and any other expenses incurred. Returns not denominated in GBP may vary with fluctuations in the exchange rate. Shariah investment restrictions may result in the funds performing less well than funds with similar objectives which are not subject to these restrictions.
Source: HSBC Asset Management as of 30 June 2026.
HSBC Islamic Product Suite - Rolling 1 Year Returns (Gross of fees per cent)
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Key Information
| Asset Class | Fund Name | ||||
|---|---|---|---|---|---|
| Multi Asset | HSBC Shariah Multi Asset Fund | IE0000O6LGE6 | 0.35* | 02/10/2023 | - |
| Global Equities | HSBC Islamic Global Equity Index Fund (SICAV) | LU2233258073 | 0.30* | 28/04/2000 | - |
| HSBC CCF Islamic Global Equity Index Fund | IE000HVAZP88 | 0.30* | 06/10/2022 | - | |
| Regional Equities | HSBC MSCI USA Islamic Screened ETF | IE000I5NV504 | 0.30 | 17/11/2022 | LSE (USD, GBP), Euronext Paris (EUR), SIX Exchange (USD) |
| HSBC MSCI World Islamic Screened ETF | IE000X9FTI22 | 0.30 | 30/11/2022 | ||
| HSBC MSCI Europe Islamic Screened ETF | IE000AGFZM58 | 0.30 | 05/12/2022 | ||
| HSBC MSCI EM Islamic Screened Cap ETF | IE0009BC6K22 | 0.35 | 12/01/2023 | ||
| HSBC MSCI Japan Islamic Screened ETF | IE0001XCFC82 | 0.30 | 27/09/2023 | LSE (USD, GBP), Euronext Paris (EUR) | |
| Property | HSBC FTSE EPRA NAREIT Dev Islamic ETF | IE000U679IT9 | 0.35 | 20/09/2023 | LSE (USD, GBP) |
| Fixed Income | HSBC GF ICAV Global Sukuk ETF | IE0002CC8353 | 0.37* | 18/01/2023 | LSE (USD) |
* For more information including all available share classes, please contact your relationship manager.
Key Risks
The value of an investment in the portfolios and any income from them can go down as well as up and as with any investment you may not receive back the amount originally invested.
- Counterparty Risk: The possibility that the counterparty to a transaction may be unwilling or unable to meet its obligations
- Exchange Rate Risk: Changes in currency exchange rates could reduce or increase investment gains or investment losses, in some cases significantly
- Index Tracking Risk: To the extent that the Fund seeks to replicate guarantee that its composition or performance will exactly match that of the target index at any given time (“tracking error”)
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Further information on the potential risks can be found in the Key Investor Information Document (KIID) and/or the Prospectus of the relevant Fund before making any final investment decisions
Past performance does not predict future returns. Past performance is shown gross of fees, meaning any potential returns will be reduced by the deduction of investment management fees and any other expenses incurred. Returns not denominated in GBP may vary with fluctuations in the exchange rate. Shariah investment restrictions may result in the funds performing less well than funds with similar objectives which are not subject to these restrictions.
Source: HSBC Asset Management as of 30 June 2026.
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Content ID: D075845_V1.0; Expiry Date: 31.12.2026