The conflict between Israel and Palestine is an issue on which we have undertaken substantial research over the years, and we continue to monitor international developments and our portfolio in relation to it.

It is our expectation that the companies in which we invest obey the international or country laws to which they are bound. We note that at this stage in the conflict, the UN and the NZ Government have called for a ceasefire, but not for sanctions nor an embargo on the supply of arms to either side in the conflict. If this changes, and companies in which the Fund is invested defied such an embargo, then we would review the appropriateness of the Fund's investment in them.

With regard to the supply and use of white phosphorus, any breach of the UN Convention on Certain Conventional Weapons (or other conventions) would be a matter of concern, and would be investigated by us in relation to our portfolio holdings e.g. Israel Chemicals.

Our exclusion decisions are guided primarily by United Nations and New Zealand Government legislation and policy positions.  For example, in 2012, the Fund excluded Israeli companies Africa Israel Investments and subsidiary Danya Cebus; Elbit Systems Limited; and Shikun & Binui from the Fund. This decision followed findings by the United Nations that that the West Bank Separation Barrier and settlement activities were illegal under international law. We also factored in votes by New Zealand for UN Security Council resolutions demanding the cessation and dismantling of the Separation Barrier, and the cessation of Israeli settlement activities in the Occupied Palestinian Territories.

In making any exclusion decisions, we draw a distinction between a company being directly and materially involved in an activity, versus being a supplier of materials or services in the normal course of business.

As is considered best practice portfolio management, around two-thirds of the Fund's portfolio is managed 'passively', tracking global equity indices. These investments are selected according to market capitalisation rather than through active stock picking. As a result the Fund is invested in around 6,500 listed companies around the world, including companies in the defence and armaments sector. The vast majority of institutional investors and sovereign wealth funds globally, and any KiwiSaver or private superannuation fund with investments in passive global equity tracker funds, will be exposed to the sector.

In the case of the NZ Super Fund, a small number of companies (e.g. Lockheed Martin) are excluded from the Fund on the basis of their involvement in the manufacture of nuclear explosive devices and/or cluster munitions. We do not categorically exclude companies involved in the manufacture or supply of other types of armaments. We do, however, expect companies involved in this sector to comply with requirements placed on them by international and national arms laws, control measures, or arms embargoes.

For more information on our decision-making approach see our Responsible Investment section.

We publish lists of our equity holdings annually.  These lists are available here.

Lists of the companies that are excluded from the Fund are available here.