How to Determine the Stocks of Weapons in Your Portfolio
If you’re worried about having a stockpile of weapons, Morningstar has a new report on how to find out if your funds are invested in these companies and some of the things you can do about it. (And read our general article on selling .)
You should avoid contact with American brands Outdoor (AOBC), Sturm Ruger (RGR) and Vista Outdoor (VSTO), all three of which are “versions” of the AR-15, according to the report. To avoid them, ask these three questions about your portfolio.
Do you have small cap stocks?
If you own a mutual fund of multiple small-cap stocks, you might be dealing with a stock of weapons: According to Morningstar, all publicly traded arms companies are small-cap stocks.
The report found that “roughly two out of every three dollars invested in small-cap funds are associated with weapons,” spread across 264 funds. Of the large arms companies that manufacture and / or sell, “American Outdoor Brands has 197 funds, Sturm Ruger has 252 funds, and Vista Outdoor has 234 funds.”
Risk-free funds are mostly actively managed.
Do you have small cap stocks in an index fund?
“If you access small-cap through an index fund, you will definitely be investing in at least one of the arms manufacturers and possibly all three, depending on the index your fund is trying to replicate,” the report says.
The report compiles some data on which funds are at risk. Table 1 shows the “stock exposure exposure of the general and extended market indices with assets over $ 1 billion.”
Table 2 shows the “open positions of small-cap ETFs with assets over $ 1 billion”.
Do you have an actively managed small cap fund?
If you have actively managed funds with small-cap funds, then you are more likely not to invest in stocks of weapons, and the only way to avoid stockpiles is to use actively managed funds. “This is because, compared to index funds, actively managed funds have far fewer names in their portfolios, and all of them, according to the portfolio manager, will outperform the market,” the report said. “With the ability to choose from thousands of small companies, few managers can choose any of the weapons depots for their portfolios.”
You can check this list to see if your funds are being invested in weapons. Here are some of the funds not invested in arms lodges:
Again, ditching arms depots is unlikely to change the behavior of companies. “Given the minimal impact on investment returns, most index investors can relax knowing they are not investing in weapons materially,” the report said. But if this is important to you, it is possible.