Mass shootings like the one this week at an elementary school in Uvalde, Texas usually boost gun sales—and gun stocks. But some investors sickened by the tragedy are likely considering dropping gun and ammunition manufacturers from their portfolios.
In recent years, asset managers like Blackrock and Vanguard have offered alternatives to funds that invest in gun stocks, part of a broader trend towards more socially responsible investing. (Although, Blackrock is still the largest institutional shareholder of three gun manufacturers.)
For the average investor, who’s unlikely to be very exposed to gun stocks, selling them might be more of a symbolic gesture. Most investors may have exposure to Walmart which sells guns, although gun sales are a small part of the company’s overall revenue, noted John Hale, global head of sustainable investing research at Morningstar.
“If you want to avoid guns completely, on principle, it’s not hard to invest that way,” Hale said. “You can do this by investing in a fund that avoids guns as a matter of investment policy. Around 300 funds exclude guns.”
If you want to scrub your holdings of exposure to gun stocks on your own, look for firearm manufacturers under the industrials section of your portfolio.
The two public companies in the US that manufacture guns are Sturm Ruger (RGR) and Smith & Wesson Brands (SWBI). Vista Outdoor (VSTO) manufactures ammunition. If investors have any part of their money in small-cap stock index funds, they will include RGR and SWBI, Hale said.
These investments likely don’t impact your portfolio very much, but the funds that invest in them hold a lot of assets under management and a significant portion of the stocks, he added.
Tools like Gun Free Funds or Weapons Free Funds are also simple ways of identifying funds that have exposure to guns or other types of weapons, and finding alternative ESG options. Both tools are managed by As You Sow, a 30-year-old nonprofit that encourages shareholder activism.
“There’s 100 million people with 401k plans that are profiting from these gun manufacturers, and no one’s even aware of it,” said Andrew Behar CEO of As You Sow.
Employees concerned about their 401(k)’s exposure to gun stocks can ask their employers to talk to the company’s plan sponsor about dropping them, said Brady Quirk-Garvan, a business development associate at Natural Investments, a progressive financial planning company.
“It used to be that the argument was there wasn’t anyone who wanted these [investing] options,” Quirk-Garvan said. “Now employees of all ages are demanding it so it’s become easier because managers are just getting used to it and it isn’t a new process for them anymore.”
(Investors can also donate directly to the families in Uvalde, Texas to pay for funeral expenses.)