David Gonski has been chairman of the Future Fund for only three months but already he's hit real trouble with the fund's surprising determination to invest in tobacco. The value of the fund's tobacco holdings in 12 different cigarette companies is $210 million -- up 40% on a year earlier.

At a Senate inquiry mid-week Gonski's general manager, Mark Burgess, dug in his heels on the issue, suggesting the majority of sovereign funds are in tobacco and so the Future Fund should be allowed to follow suit.