Friday, February 23, 2018

If you own these mutual funds and ETFs, you own guns...

CNBC recently noted that:

"Major funds invested in gun stocks include the Vanguard Total Stock Market ETF, iShares Russell 2000 ETF and Schwab U.S. Broad Market ETF."

They went on to state that:

"Last week's mass killing of 17 people at a public high school in Parkland, Florida, has caused some major pension funds and institutions to investigate the extent of their investments in gun makers.

Some of Wall Street's largest exchange-traded funds are currently invested in American Outdoor Brands — formerly Smith & Wesson — and Sturm, Ruger & Co., designers, makers and retailers of firearms for domestic buyers.

Fierce scrutiny has pushed New Jersey state lawmakers to restrict the state's public pensions from investing in the stocks of gun manufacturers, while the world's largest asset manager, BlackRock, said it would 'engage' with (gun) companies on their response to the shooting." 

We have come to expect large investment funds, like Blackrock, to issue self serving statements about their ownership of gun manufacturers. This is the "we are investors, not statesmen or policy makers" claim. It is false. Blackrock and others are deeply involved in every policy issue of consequence, from debates on taxing carried interest to discussions concerning financial reform. They are involved in the gun control debate, too, through their PAC and campaign contributions, as we stated in 2012, following the Newtown shooting.

You will recall that the CEO of Blackrock recently wrote that:

"Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders. It will succumb to short-term pressures to distribute earnings, and, in the process, sacrifice investments in employee development, innovation, and capital expenditures that are necessary for long-term growth."

It looks like Mr. Fink and company may be succumbing to the very pressure they warn others about. (Far be it for me to give any more free advice to Blackrock, a firm we helped when we developed the first targeted Mortgage-backed Security pool backed by loans from Black financial institutions and Blackrock put our investments in a portfolio they managed for Washington Gas Light.) Or, it may be that your perspective depends upon just how true you are to your purpose: "Many faith based pension funds and other socially responsible investors do not invest in firms like American Outdoor Brands and Sturm, Ruger & Co. specifically because they do not want to profit from human bloodshed. Blackrock is empowered to make the same choice, but wants to "engage" instead.

Of course.... 

Their children may not face the same risks yours do.