After the February mass shooting at Marjory Stoneman Douglas High School where 17 people were killed, many investors are looking for ways to support gun control through their portfolios.
“There has been a very vocal outcry,” says Michael Sury, a finance lecturer at the University of Texas at Austin. He notes major institutional investors, including pensions and endowments like the California State Teachers Retirement System, have also begun studying ways to divest their weapons-based investments.
Meanwhile, large money managers like BlackRock are excluding gun makers from certain funds, and where the companies can’t be excluded, such as index funds, BlackRock is putting pressure on firearms manufacturers by questioning their business practices.
“In those portfolios where [BlackRock] may be committed to their weapons-based investments, they are looking for ways to become more actively engaged,” Sury says. “This engagement could include examining corporate policies relating to distribution or internal investment in safety technologies.”
[See: These 7 Funds Make You Feel Good About Investing.]
Investment companies taking such a stance may be on to something. “These are not only moral issues, these are current and future trends,” says Andrew Bellak, CEO of Stakeholders Capital in Amherst, Massachusetts. The firm specializes in socially responsible investing and has “routinely screened out” companies that make guns and weapons, though he says his clients would be in favor of investing in common sense gun and weapon safety technology.
Whether you want your portfolio to support responsible gun-related companies or exclude gun makers and retailers altogether, here’s how you can invest without betraying your values.
Identify funds that screen for gun control. You can demonstrate your support for value-based investing and remain diversified with exchange-traded funds that hold only companies that meet a high standard of environmental, social and governance (ESG) criteria. But Sury says they do not appear to have experienced “inflows commensurate with the public outrage” over gun violence, probably because it is difficult to identify them.
Just over a third of socially responsible ETFs screen out gun stocks, Sury says.
Among the larger exchange-traded funds with more than $100 million in assets under management are the iShares MSCI KLD 400 Social (ticker: DSI), iShares MSCI USA ESG Select ( SUSA), iShares MSCI EM ESG Optimized ( ESGE), iShares MSCI EAFE ESG Optimized ( ESGD), and Global X S&P 500 Catholic Values ( CATH), and Nationwide Maximum Diversification US Core Equity ETF ( MXDU). To find others, search funds for their gun stock makeup using sites like GoodbyeGunStocks.com.
Some investors may wonder if excluding weapons-related manufacturers means sacrificing some portfolio returns. “While the academic literature has been mixed on this issue, more anecdotal evidence seems to suggest that there is not a significant give-up, if any, from investing in otherwise broadly diversified ESG or values-based portfolios,” says Sury, though such funds tend to have higher fees than “vanilla” index funds.
[Read: Ethical Investing Continues to Grow.]
Many socially responsible ETFs perform just fine. The Oppenheimer Global ESG Revenue ETF returned 20.77 percent in the last year while the Columbia Sustainable U.S. Equity Income ETF gained 14.33 percent.
Try themed investing. New retail investing companies such as Motif and OpenInvest let individual investors select and track equities based on themes they support or oppose, Sury says, and this can be a good way for supporters of gun control to invest. OpenInvest has set up a Divest from Gun Violence page that enables users to exclude from their portfolios any companies deriving more than five percent of revenue from the sale of weapons and ammunition.
Consider investing in new gun control technology. Artificial intelligence and blockchain could play a role in gun safety by preventing a child from firing a parent’s weapon, says Scott Amyx, an investor and founder of Amyx Ventures and author of “Strive: How Doing the Things Most Uncomfortable Leads to Success .”
Take Zore, the startup that has brought to market a gun lock with fast access and motion-activated tampering alerts. The company’s Indiegogo crowdfunding campaign raised about $600,000 in product sales last year and about $3 million to date. Identilock by Sentini makes a fingerprint scanner that fits over the trigger of a firearm to prevent accidental or deliberate misuse.
There are, however, limitations to many new gun technologies, which won’t work properly if the battery is dead or if the holder sweats or has unrecognizable prints, Amyx says. In other words, it may not be as reliable a socially responsible investment as you’d like.
Invest in companies that protest gun violence. The same way that people speak out against gun violence or contribute money to the cause, companies do, too.
You can indirectly invest in pro-gun control measures by selecting firms that publicly disavow gun violence, have broken ties with the National Rifle Association or support the cause financially. Such companies include Delta Air Lines ( DAL), Hertz Global Holdings ( HTZ), Chubb Ltd. ( CB), Symantec ( SYMC) and more.
[Read: 8 Investments That Make a Difference.]
You can also write and call your fund company and retirement plans to stop investing in companies – particularly gun makers – that don’t reflect your values, Bellak says. Some larger funds may not even miss having these companies in their portfolios because the market capitalizations of three public gun makers, American Outdoor Brands Corp. ( AOBC), Sturm, Ruger & Co. ( RGR) and Vista Outdoor ( VSTO), are relatively small.
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4 Ways Anyone Can Support Gun Control originally appeared on usnews.com
