Alan Diaz / AP
This Wednesday, June 29, 2016, photo shows guns on display at a gun store in Miami.
Wednesday, Feb. 28, 2018 | 2 a.m.
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 this month that killed 17 people in Parkland, Florida, has intensified scrutiny on the various 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. Blackstone, the private equity giant, recently contacted the hedge funds that it owns, asking about their holdings of gun stocks.
Here is how individual investors, including people whose only investments are through their retirement plans, 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 known as Smith & Wesson, which is the manufacturer of the AR-15 semi-automatic 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 very small positions in the gun companies Sturm Ruger and Vista Outdoor.
The investments represent slivers of the pension funds’ overall assets, but they nonetheless are generating debate. New Jersey lawmakers last week moved to cut off investments in gunmakers by the state pension plan.
Index Funds
Exchange-traded index funds, which are designed to track the performance of various market indexes, are all the rage these days. They hold the 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 & Defence 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, the index giants BlackRock and Vanguard, are now among the top shareholders of three publicly traded 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 be contacting officials at the three publicly traded firearms companies, asking them about how they were responding to the shootings.
Vanguard has taken a more cautious stance. With 20 million clients, the firm said it was 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 spokesman for Capital said Monday that the investment firm “was engaging with gun manufacturers to understand their plans to ensure the safe use of these products.”
And the 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.
