You might be a gun owner, even if you’re weaponless
You probably are a gun owner. You might not actually possess a gun. But if you have a pension or a 401(k) or an investment in index funds, there is a good chance that, directly or indirectly, you own shares of one or more gun manufacturers.
Like it or not, that means that your financial incentives are at least partly aligned with those of gunmakers. And in general, the more guns they sell, the more money their shareholders — in other words, you — make.
The school shooting last month that killed 17 people in Parkland, Fla., has intensified scrutiny on the ways in which financial institutions and other companies prop up the firearms industry, whether through lending money to gun companies or having marketing partnerships with the National Rifle Association.
Many companies have severed their ties to the NRA. Private-equity giant Blackstone recently contacted hedge funds that it owns, asking about gun stock holdings.
Here is how individual investors are financially connected to the gun industry — even if they do not realize it.
Pension funds: A number of state pension funds own shares in the gun makers. For example, pension funds for public employees in Florida, Texas, Wisconsin and Ohio all have stakes of less than 1 percent in American Outdoor Brands, formerly Smith & Wesson, which manufactures the AR-15 semiautomatic rifle that has been used in a number of recent mass shootings.
TIAA, which oversees retirement investments for educators and teachers, has small stakes in American Outdoor Brands and two other publicly traded gun companies. The pension fund for teachers in New York state also has small positions in gun companies Sturm Ruger and Vista Outdoor.
The investments represent slivers of the funds’ overall assets, but they nonetheless are generating debate. New Jersey lawmakers have moved to cut off investments in gunmakers by the state pension plan. Index funds: Exchangetraded index funds, which are designed to track the performance of various market indexes, are all the rage these days. They hold shares of every company in whatever index they’re tracking. These indexes include the Russell 200 index for small companies and the Standard & Poor’s Aerospace & Defense Select Industry index.
That means these investment firms own the stocks, not because they see investment value in them, but because they are part of a broad stock index.
Two of the world’s biggest asset managers, BlackRock and Vanguard, are now among the top shareholders of three gun companies: Sturm Ruger, American Outdoor Brands and Vista Outdoor.
BlackRock has an 11 percent stake in American Outdoor Brands, while Vanguard’s stake is 8 percent. For Sturm Ruger, BlackRock owns 17 percent while Vanguard has 9.5 percent.
BlackRock said it would contact officials at the three firearms companies, asking about how they are responding to the shootings.
Vanguard has taken a more cautious stance. With 20 million clients, the firm said it is unrealistic to cater to such a wide variety of views on pressing social topics. “We believe mutual funds are not optimal agents of social change,” a spokesman said.
Vanguard does offer clients a way to screen funds for stocks that they do not want to invest in. Stock pickers: While index funds are prominent shareholders of these gun companies, some large mutual funds — in which portfolio managers individually pick stocks — are also substantial owners.
One of the world’s biggest fund companies, Capital Group, which oversees $1.6 trillion in assets, has an 8 percent stake in Sturm Ruger.
A Capital spokesman said that the investment firm is “engaging with gun manufacturers to understand their plans to ensure the safe use of these products.”
And mutual fund giant Fidelity is the top shareholder of Vista Outdoor, with 15 percent of the company. The stake is held largely through Fidelity’s actively managed funds.