BlackRock announced new products for clients looking to avoid investing in companies that make or sell firearms for civilian use, a significant step for the world’s largest asset manager as Wall Street comes under pressure to take a stance in America’s gun debate.
On Thursday, BlackRock said it had created new exchange-traded funds and products for pensions and retirement plans that screen for companies that make or sell firearms. BlackRock is also shifting the indexes of existing exchange-traded funds focused on socially responsible investments to avoid gunmakers and sellers.
The new funds will not invest in Dick’s Sporting Goods, Kroger, Walmart, American Outdoor Brands, Vista Outdoor and Sturm, Ruger.
A Walmart spokesman said the company doesn’t comment when individuals or groups buy or sell shares because those actions concern personal decisions. A Kroger spokeswoman said Kroger’s Fred Meyer division announced last month that it would phase out the sales of firearms and ammunition from its stores in Alaska, Idaho, Oregon and Washington. Those products represent $7 million in annual revenue — about 0.006 percent of Kroger’s annual sales — the spokeswoman said.
BlackRock said the changes came in response to client interest in products that exclude firearms companies from their portfolios, particularly in the wake of the mass shooting at a school in Parkland, Fla., that killed 17 students and staff at Marjory Stoneman Douglas High School.
In the days afterward the president of the Florida teachers union pressed the state pension fund to divest itself of shares in Massachusetts-based American Outdoor Brands, the company that manufactures the assault rifle used in the massacre.
Most pension portfolios hold broad index funds with shares of hundreds or even thousands of companies. But the stocks of gunmakers, in particular, have not done well of late. From June 13, 2016, though Feb. 21, 2018, the shares of American Outdoor Brands were down 53 percent.
In March, BlackRock said it would engage with major firearms manufacturers and distributors on their policies and business practices.
“For manufacturers and retailers of civilian firearms, we believe that responsible policies and practices are critical to their long-term prospects. Now more so than ever,” BlackRock’s March memo read.
The firm is also the largest institutional owner of Ruger at 16 percent, as well as American Outdoor Brands with 10.5 percent.
In the weeks after the Parkland shooting, a cascade of companies with ties to the gun industry and the National Rifle Association announced changes to their partnerships and policies. Dick’s Sporting Goods announced it would stop selling military-style rifles, ban high-capacity magazines and not sell guns to people younger than 21. Walmart and Kroger said they would raise to 21 the age required to buy a gun.
Wall Street has been slower to engage in the gun debate. Last month, Citigroup mandated that the bank’s new retail sector clients or partners restrict firearm sales for people younger than 21 and not sell bump stocks, gun accessories that effectively turn semiautomatic weapons into machine guns. Citigroup’s policy also barred those clients from selling firearms to someone who has not passed a background check, including in cases when background checks have not returned after the federally mandated three-day waiting period.