"The board's position is that it will not invest in economic activities that are illegal in Australia or contravene conventions," Hetherton said. "We will continue to monitor the portfolio and the activities of relevant companies to assess whether further exclusions become necessary or whether current exclusions can be removed."

Cluster bombs have been used by at least 15 countries, including the U.S., Russia, the U.K., France and Israel, according to the Cluster Munition Coalition, an umbrella group for 300 civil-society organizations.

"This is important given that Australia is a signatory to the international convention banning these horrendous weapons," Michelle Fahy, Canberra-based spokesman at the coalition, said in e-mailed comments. "Australia has one of the largest investment markets -- we would really make a difference if our finance sector ceased financing and investing in the manufacture of these weapons."

Sovereign Wealth Funds

The accord is the first international treaty to ban an entire category of conventional arms.

Established as a statutory authority by the administration of Prime Minister John Howard, the fund has its own board. Oversight is provided by the Treasurer and Minister for Finance and Deregulation, according to its website.

The Future Fund states its purpose as "accumulating financial assets sufficient to offset the Commonwealth's unfunded superannuation (pension) liabilities by 2020," according to a statement of investment policies on its website.

The fund is the world's 13th largest sovereign wealth fund by assets under management, ranked behind the Qatar Investment Authority, according to the Sovereign Wealth Fund Institute, which analyses the sector. The Abu Dhabi Investment Authority is the world's largest with $627 billion, followed by Norway's Government Pension Fund-Global with $556.8 billion.

Investment Rules

Run by former Commonwealth Bank of Australia Chief Executive Officer David Murray, the fund targets an average return of at least the rate of the consumer price index plus 4.5 percent to 5.5 percent per annum as its long-term benchmark with an "acceptable, but not excessive, level of risk."

The fund has faced calls from the Australian Greens, who helped Prime Minister Julia Gillard win power last year, for its investment rules to be revised since disclosing in March A$147.7 million of tobacco investments.

"It is time for the government to do some soul searching on where the appropriate place is to invest taxpayers' funds," Greens Party Senator Scott Ludlam said in a phone interview from Broome, Western Australia. "I congratulate the fund for divesting the cluster bomb stocks and they probably went further than the bill before Parliament would have required them to do."