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Australia Future Fund excludes tobacco producers from portfolio

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Winfield cigarettes from Australia

The board of Australia's A$82.4 billion (US$84.7 billion) Future Fund announced a decision Thursday to exclude tobacco product manufacturers from the superannuation fund's investment portfolio.

The move, following a review announced by the superannuation fund's governance committee in October 2012, affects roughly A$222 million of the fund's holdings in the securities of 14 primary tobacco producers as of Dec. 31, 2012. That exposure amounts to roughly 0.3% of the Future Fund's overall portfolio.

In a news release, David Gonski, the chairman of the Future Fund board, cited tobacco's “damaging health effects” and “addictive properties” as factors prompting the board's decision.

In an e-mail, Will Hetherton, a Melbourne-based spokesman for the Future Fund, declined to reveal when the superannuation fund's portfolio would become tobacco-free, saying, “We don't discuss our trading activity.”

The decision to exclude “primary tobacco producers” indicates that the fund's focus is on “manufacturers of tobacco products, rather than retailers,” Mr. Hetherton wrote.

The exclusion affects securities issued by Altria Group, British American Tobacco, British American Tobacco (Malaysia), Gudang Garam Tbk, Imperial Tobacco Group, ITC, Japan Tobacco, KT&G Corp., Lorillard, Philip Morris CZ, Philip Morris International, Reynolds American, Souza Cruz and Swedish Match.

The tobacco companies join a list of 10 companies previously excluded from the fund's portfolio due to their involvement in the manufacture of cluster munitions and land mines.