(Bloomberg News) Australia's sovereign wealth fund dumped holdings in mine and cluster bomb makers as the nation prepares to ratify a treaty banning the weapons.
The Future Fund, which has A$74.6 billion ($81.7 billion) in assets, this year excluded 10 companies involved in making munitions from its investments, including selling two of its three biggest defense holdings in Lockheed Martin Corp. and General Dynamics Corp., Will Hetherton, a fund spokesman, said in e-mailed comments.
The fund, established in 2006 to cover the pension costs of retiring lawmakers, judges and public servants, had A$239 million invested in defense and aerospace as of Dec. 31, according to portfolio holdings obtained by Bloomberg News through an Australian Freedom of Information Act request.
"Having initially excluded a number of companies on the basis of very clear evidence, during 2010 we undertook a rigorous process to identify and assess companies where evidence was less strong," Hetherton said. "As a result we have now excluded a total of 10 companies and unwound any investments we held."
While Australia joined more than 90 other countries in signing the Convention on Cluster Munitions in 2008, the nation has yet to ratify the treaty with legislation currently before Parliament. The accord prohibits the use, development, production, stockpiling and transfer of cluster weapons able to release dozens of "bomblets" over a wide area and which have been blamed for civilian casualties.
Defense Holdings Sold
Other stocks to be sold include Alliant Techsystems Inc., L-3 Communications Holdings Inc., Raytheon Co. and Singapore Technologies Engineering Ltd. The defense investments sold by the Future Fund had a market value of A$74 million as of Dec. 31, according to the documents, which don't say when the fund bought the shares or how much they paid for them.
"We don't direct the investment decisions of the Future Fund," Treasurer Wayne Swan told reporters in Canberra today. "Cluster bombs, my personal view of those, is that they are very destructive weapons which can cause enormous amounts of human misery."
Lockheed Martin rose 25 percent since the start of 2006 and the end of last week while General Dynamics is up 28 percent. The MSCI World Index gained 10 percent in the same period.
The fund's biggest defense holding is in Honeywell International Inc., with a value of A$28.2 million.
Under legislation to ratify the treaty, it would be illegal for an individual or bank to finance or help a company that develops or produces cluster munitions.