Publicly Traded Gun Companies in Your Investment Portfolio

If you're a savvy investor, you might be surprised to learn that some of the biggest gun companies in the world are publicly traded, meaning you could have unknowingly invested in them.

Sturm, Ruger & Co., Inc. is one of the largest publicly traded gun companies, with a market capitalization of over $1 billion.

Many of these companies have a long history, with Sturm, Ruger & Co., Inc. being founded in 1949.

Some of these publicly traded gun companies have been around for decades, with Smith & Wesson Holding Corporation being founded in 1852.

There are two publicly traded gunmakers in the U.S.: Sturm Ruger and Smith & Wesson Brands. They have market capitalizations of $1.2 billion and $679 million, respectively, making them small-cap stocks.

Sturm Ruger is held in the Russell 2000 Index at a weighting of 0.05%. Smith & Wesson merits a 0.03% weighting in the Russell 2000 Index.

Vista Outdoor was once a third publicly traded gunmaker, but it sold off its Savage Arms gun manufacturing division to private buyers in 2018. It still remains in the ammunition manufacturing business.

These two publicly traded gunmakers are responsible for more than one third of guns manufactured in the U.S. They generate virtually all their revenue from gun manufacturing and make semiautomatic assault-style weapons.

Both Sturm Ruger and Smith & Wesson Brands have a relatively small impact on investment returns, even if you hold an actively managed fund that is overweighting one of these stocks.

The combined weighting of gun stocks in the small-cap Russell 2000 Index is approximately 0.36%. This means that gun stocks have a barely detectable effect on returns, even if you hold an index fund.

If you want to avoid guns completely, you can invest in a fund that avoids guns as a matter of investment policy. There are 386 such funds available, including sustainable funds that consider a broader list of environmental, social, and governance risk factors.

Sturm Ruger and Smith & Wesson Brands are the two publicly traded gunmakers in the United States, with market capitalizations of $1.2 billion and $679 million, respectively.

Both companies generate virtually all their revenue from gun manufacturing and make semiautomatic assault-style weapons.

Sturm Ruger has a 0.05% weighting in the Russell 2000 Index, while Smith & Wesson Brands has a 0.03% weighting.

You might be surprised to know that these companies are included in index funds that track the entire stock market, such as the Vanguard Total Stock Market Index Fund.

This fund owns 1.4 million shares of Smith & Wesson, 501,000 shares of American Outdoor Brands, and 518,000 shares of Sturm, Ruger & Co.

While these companies can also turn up in small-cap-specific funds and dividend-driven funds, they likely aren't material to your investment returns because they make up such a small portion of the total assets in an index fund.

Vista Outdoor and Olin Corporation are other publicly traded companies that make ammunition, but it's worth noting that Vista sold off its Savage Arms gun manufacturing division to private buyers in 2018.

If you want to exclude companies that sell guns from your investments, it might be more challenging since one of those retailers is Walmart, a large-cap stock in the S&P 500.

There are two publicly traded gunmakers in the United States: Sturm Ruger and Smith & Wesson Brands.

These companies are considered small-cap stocks, with market capitalizations of $1.2 billion and $679 million, respectively.

You can check if you're invested in these companies by looking at the prospectus associated with any fund you own, where gunmakers and ammunition manufacturers are typically listed in the "industrials" category.

Gun retailers like Walmart will be listed under a "consumer" category.

For most investors, exposure to gun stocks is minimal, making up only a small portion of their investment returns.

For example, Walmart is weighted at 0.62% in S&P 500 index funds, while Dick's Sporting Goods is weighted at 0.32% in the S&P MidCap 400 Index.

The combined weighting of gun stocks in the small-cap Russell 2000 Index is approximately 0.36%.

There are 386 funds that exclude guns as a matter of investment policy, which can be found using Morningstar Direct.

These funds often consider a broader list of environmental, social, and governance risk factors as part of their investment process.

Large asset managers like BlackRock and Vanguard engage with companies they own to discuss issues that may affect long-term shareholder value.

This process is called engagement, and it's aimed at helping companies understand the issues that are important to their investors.

As permanent investors, these asset managers have a stake in maintaining and strengthening the broader social systems within which they invest.

Their engagement activities should include systemic issues that affect subject companies materially and that the companies can play a role in helping address more broadly.

Significant engagement with gunmakers and other companies they own is an obligation, especially considering the spillover costs of gun misuse on society at large.

Even a tiny position in a large fund can equate to a significant ownership stake for asset managers. This is because index funds have so many assets under management that even small positions add up quickly.

Index funds hold very small positions in certain stocks, yet these positions can account for a large percentage of the firms' outstanding shares. For example, Sturm Ruger is only a 0.125% position in iShares Core S&P Small-Cap ETF IJR.

The fund holds 7% of Sturm Ruger's outstanding stock, demonstrating the significant ownership stake that can result from a small position in a large fund. This highlights the importance of considering the overall size of the fund when evaluating the impact of a small position.

Asset managers like BlackRock and Vanguard actively meet with the companies they own to discuss issues that may affect long-term shareholder value. This is a process called engagement.

As large shareholders, they have a stake in maintaining and strengthening the broader social systems within which they invest. Healthy systems create the conditions for better investment returns.

Their engagement activities should include systemic issues that affect subject companies materially and that the companies can play a role in helping address more broadly.

Walmart, the nation's largest retailer, still sells guns, but only those used for hunting, and has stopped selling handguns and assault-style rifles since 2015.

You might be surprised to learn that Walmart is a top-30 holding in the S&P 500, with a market cap of $385 billion and a weighting of about 0.62%.

Dick's Sporting Goods, another prominent retailer, also sells guns but no longer sells assault-style weapons.

The stock has a market cap of $10.4 billion and is held in the S&P MidCap 400 Index at a weighting of about 0.32%.

You can find out if you're exposed to gun stocks by reading the prospectus associated with any fund that you own, which might list firearm or ammunition manufacturers or retailers in the "industrials" category.

Gunmakers and ammunition manufacturers, such as Smith & Wesson Brands and Sturm, Ruger & Co., are small-cap stocks and are included in index funds that track the entire stock market.

The Vanguard Total Stock Market Index Fund, for example, owns 1.4 million shares of Smith & Wesson, 501,000 shares of American Outdoor Brands, and 518,000 shares of Sturm, Ruger & Co.

It's worth noting that these companies make up a small portion of the total assets in an index fund, so their impact on your investment returns is likely minimal.

If you want to exclude companies that sell guns from your investments, it might be more challenging, especially since Walmart is a large-cap stock in the S&P 500.