Guns, ammo lumped with hospitals, greeting cards in U.S. fund filings
By Tim McLaughlin
BOSTON (Reuters) - U.S. investors who want to divest from firearms and ammunition makers may find it not so straightforward: They are hidden among the stocks and bonds of hospitals, toymakers and greeting card companies.
The push to divest from the firearms industry has grown in recent years as large public pension plans and individual investors eliminate names like handgun maker Sturm Ruger & Co Inc (NYSE: RGR) and ammunition maker Olin Corp (NYSE: OLN) from their portfolios. The talk about divestment usually intensifies after a mass shooting, such as the attack on Sunday at a rural Texas church.
The names of firearms and ammunition securities are not always obvious for investors seeking to weed them from their portfolios. U.S. mutual funds classify the investments across a wide array of industries: aerospace and defense, consumer goods, healthcare, household products, leisure and retail, according to a Reuters analysis of filings with the U.S. Securities and Exchange Commission.
Some mutual funds just follow the classifications used by the provider of their benchmark index.
For several years, the Oppenheimer Global High Yield Fund
Starting in 2014, the fund grouped senior notes issued by FGI Operating Co LLC, a Remington subsidiary, with similar securities issued by hospital operators such as HealthSouth Corp (NYSE: HLS) and Tenet Healthcare Corp (NYSE: THC), according to SEC disclosures.
But last month, the Oppenheimer fund changed the FGI notes as an investment in the aerospace and defense sector, according to a quarterly disclosure with the SEC. OppenheimerFunds declined to comment about its classifications.
The Boston-based Unitarian Universalist Association (UUA) uses separate accounts and outside help to parse out objectionable investments among its holdings of large-cap stocks.
Toronto-based ESG adviser Sustainalytics identifies and removes securities that do not pass the faith-based group's screens, said Tim Brennan, UUA treasurer and chief financial officer. The trend is to make investments based on environmental, social and governance (ESG) criteria.
"Certainly there is heightened concern here at the UUA after an event like (the shooting in Texas)," Brennan said. "But from an investment perspective, I would describe it as a steady concern."
Some U.S. mutual funds make it easy to locate firearms investments in disclosures that may list several hundred or even thousands of securities.
A core bond fund run by Valic Co simply classifies the FGI senior notes backed by Remington as a "firearms & ammunition" investment. The City National Rochdale Fixed Income Opportunities Fund
By contrast, the Hotchkis & Wiley High Yield Fund lists the FGI notes and debt issued by top ammunition maker Vista Outdoor Inc (NYSE: VSTO) as a "personal and household products" investment. The fund also lists debt from American Greetings Corp [AMER.UL], the world's largest greeting cards company, in that category, SEC filings show.
A spokesman for Hotchkis & Wiley declined to comment.
Fidelity's $4.8 billion Nasdaq Composite Index Fund
John Rosenthal, co-founder of the Stop Handgun Violence Foundation in Newton, Massachusetts, said he has found that the broad labeling of firearms securities has made it difficult for him to remove the investments from his personal portfolio.
"Why don't these funds just call these investments what they are: merchants of death," Rosenthal said.
(Reporting by Tim McLaughlin; Additional reporting by Ross Kerber in Boston; Editing by Jeffrey Benkoe)