Weapons makers and SpaceX in government's key investment fund portfolio

analysis Weapons makers, SpaceX and semiconductors feature in Australia's Future Fund portfolio How much has Australia's Future Fund profited from investing in weapons manufacturers in the last six months? How many SpaceX shares has it bought? How many Tesla shares has it sold? Australia's sovereign wealth fund published its latest six-monthly investment report on Monday. It published it quietly, without a press release or public announcement. The Future Fund is two decades old and it has grown its initial $60 billion investment, from 2006, into $290 billion (and it manages an additional $66 billion across six smaller funds). This latest report shows what stocks the fund bought and sold between December 31 and June 30, and what returns its stock holdings generated in the first half of this year. Semiconductors and microchips The Future Fund has profited immensely from its investments in the global semiconductor and chip industry. But an interesting thing here is that it hasn't gone on a spending spree. In fact, it has been selling down its stake slightly in a number of companies. But the share price of some of the companies has risen so much in the past six months that the value of the fund's holdings in the companies has soared. For example, the value of its holdings in SK Hynix (a South Korean semiconductor company) surged by 199 per cent in the last six months, from $280.2m to $837.3m, even though the Future Fund sold 74,000 shares in the company. The value of its holdings in Micron Technology (a US semiconductor company) exploded by 304 per cent, from $470.5m to $1.9 billion, as the fund bought an extra 42,000 shares in the company. The table below shows its holdings in nine specific companies in the industry. The value of its holdings in those nine companies has increased from $4.8 billion to $8.3 billion (+73 per cent) in the last six months alone: The 'Magnificent 7' The so-called "Magnificent 7" stocks include Tesla, NVIDIA, Alphabet (Google), Microsoft, Meta Platforms, Apple and Amazon. The value of the Future Fund's share holdings in those seven companies fell by $1.4 billion in the first six months of this year. It was worth $11.1 billion at the start of the year, but by the end of June it was worth $9.7 billion. That decline in value reflects both falling share prices and the Future Fund's share sales. The fund sold shares in every one of those companies, except for Microsoft. The value of its Telsa holdings declined by 28 per cent (from $519.1m to $374.8m), and the value of its Meta holdings fell by 26 per cent (from $1.2b to $923.7m). The value of its holdings in Microsoft fell 24 per cent, even though it bought 48,000 more Microsoft shares: Fund buys SpaceX and Palantir, sells some Tesla shares The Future Fund bought into SpaceX this year, Elon Musk's aerospace company. SpaceX went public on the NASDAQ on June 12 and by the end of the month the Future Fund owned 40,185 shares, valued at $9.9 million. Norway's sovereign wealth fund also bought into SpaceX. While the Future Fund bought some SpaceX shares, it sold some of its Telsa shares (it sold 152,363 of them, leaving it with 617,352). SpaceX's initial public offering (IPO) was extremely controversial. NASDAQ's rules were changed to force passive funds to buy SpaceX shares within weeks. And the voting rights of SpaceX shareholders were severely restricted. The Future Fund's investment managers also considered Palantir Technologies to be a good investment. In December, the fund held 620,169 Palantir shares worth $165.3 million, and in June it held 680,569 shares (60,400 more shares) worth $114.6 million ($50.7m less in value, despite owning more shares). Earlier this month, Coles Supermarkets announced it was cutting ties with Palantir after its three-year contract ends in 2027. The move followed a pressure campaign from the activist group GetUp! and growing concerns about Palantir's surveillance technology. In February, Will Hetherton, the Future Fund's chief corporate affairs officer, defended the fund's investments in Palantir. During a Senate estimates hearing, Greens senator Barbara Pocock asked Mr Hetherton if the Future Fund had done any due diligence on Palantir's human rights record before investing over $100 million in the company, given its role in the immigration crackdowns in the US and the growing use of its surveillance and AI-powered military software globally. Loading..."The investment that the board has in Palantir … is held through two index-focused investment managers," Hetherton said in February. "The board sets the overall strategy in terms of the risk exposures that we seek, but the actual selection of stocks and the application of strategies — and in this case they're effectively passive index-tracking strategies — is a matter for the managers. So we're not involved in selecting individual stocks. "I would observe that Palantir is a very widely held stock by investors globally," he said. Defence, aerospace, and weapons The Future Fund also continued to make money from its investments in "defence companies" — that includes global weapons manufacturers and aerospace companies. It bought more defence giant Thales shares in the first half of this year, and the overall value of its Thales holdings jumped by 64 per cent ($13.4m to $22.1m). It bought another 8,000 shares in the Israeli company Elbit Systems, with the value of its holdings in the defence technology and electronics company jumping by another 128 per cent (from $8.6m to $19.7m). Two years ago, the Future Fund only held $1.3m worth of Elbit Systems shares. The table below shows the change in value in the Future Fund's holdings in some well-known defence and aerospace companies and weapons manufacturers: Norway's sovereign wealth fund — the world's largest — has been prohibited from investing in a number of companies that the Future Fund invests in. Norges Bank Investment Management (NBIM) manages Norway's fund and its exclusions list includes Airbus SE, BAE Systems, Boeing, Caterpillar, Elbit Systems, General Dynamics, and others — all of which the Future Fund invests in. In comparison, the Future Fund's exclusions list is dominated by companies involved in the tobacco industry.