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Investing After Parkland…

Mark Bateman - March 27, 2018

Columbine…Sandy Hook…Las Vegas…Parkland.

Each tragedy has raised the question, “What can we do?”  For some, in addition to advocating for changes in public policy, they are pushing for changes by companies involved in the firearms industry.  Pressure to change can come from consumers, employees, community members, and investors.

The firearms industry includes both manufacturers and retail distributors.  The distribution part of the industry has been highlighted by announcement from companies like Walmart, Dick’s Sporting Goods, Kroger, and REI that they are changing their policies related to the sale of firearms and in relation to companies that manufacture firearms.   Their recent announcements frequently focus on age restrictions, and in some cases, the sale of assault style weapons.

But in most cases, retail stores currently selling firearms will continue to do so.

For the investor, what options are available to divest from firearms?  For those invested directly in equities, there are easily available lists of companies you can avoid.  But if you’re invested in mutual funds, it may be a little more difficult to know what you even have.

Based on ENSOGO Analytic’s analysis of various mutual fund categories, most funds have very little exposure to either firearms manufacturing or firearms distribution.

  • S&P 500 index funds including funds like BTIEX) have 0.6 percent of their weight in companies that sell firearms on a retail basis, while these funds have no exposure directly to the manufacture of firearms.
  • S&P Mid-Cap 400 index funds (funds like NTIAX) have 0.3 percent of their weight in companies that manufacture firearms and 0.1 percent of their weight in companies that sell firearms on a retail basis.
  • S&P Small Cap 600 Index funds (funds like DISSX) have 0.7 percent of their weight in companies that manufacture firearms and 0.4 percent of their weight in companies that sell firearms on a retail basis.

As you can see, the smaller the companies in the index, the higher the percentage of the fund invested in manufacturing of firearms, while the largest percentage related to distribution is in the large cap index.

Knowing the exposure you have in your investments is the first step in deciding what’s acceptable and what’s unacceptable.

What can you do?

  • Ask your financial advisor whether your portfolio includes firearms manufacturers and/or retail distributors. Work with your advisor to build a portfolio that reflects your values.  Your advisor may need tools to help you know what your investments have, so you can point your advisor to ENSOGOanalytics.com.
  • Write to the managers of your mutual fund and express your views on firearms.
  • Communicate any investment decision to the companies affected.