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iShares gun-free ETFs fail to reach Europe

On 2 March, two weeks after the shooting at Stoneman Douglas High School, Blackrock said it had “put a spotlight” on the companies that manufacture and distribute civilian firearms.

In a follow-up statement issued on Thursday, Blackrock said it was extending its ETF range in the US to include products with specific exclusions for civilian firearms in both its ESG and non-ESG ranges. When contacted by our sister publication Portfolio Adviser an iShares spokesperson said the launch currently only applies to its US range.

Speaking on the US changes, Blackrock said that “based on client demand, Blackrock will offer five new strategies seeking to track broad market indexes: S&P 500, Russell 1000, Russell 2000, Russell 3000 and MSCI World ex-US that exclude all producers and large retailers of civilian firearms.”

Blackrock’s iShares MSCI USA Small-Cap ESG Optimized ETF (ESML) is to be launched on or about Thursday 12 April and will track the constituents of the MSCI USA Small Cap Extended ESG Focus Index and exclude civilian firearm businesses. Blackrock has also filed an initial registration statement for the iShares ESG US Aggregate Bond ETF with the same exclusions.

In its non-ESG range, Blackrock is offering investment products that are firearm-free for institutional investors, including for 401(k) plans.

The latest press statement did not specify which companies would be targeted, but in its March release Blackrock said that there were three publicly-traded companies in the US whose primary business is firearms manufacturing: American Outdoor Brands, Vista Outdoor and Sturm Ruger. None of the companies were in Blackrock’s actively-managed portfolios, but in passive products they represent 0.01% of total assets.

That same press release said Blackrock was engaging with large retailers such as Walmart, Kroger and Dick’s Sporting Goods to understand whether they have the appropriate policies and controls in place when it comes to firearms sales.

Portfolio Adviser searched a number of Europe-registered iShares products with US equities exposure and found a handful of large ETFs with exposure to the companies named in Blackrock’s press release. The iShares MSCI USA Small Cap Ucits ETF had exposure to all three firearm manufacturers as well as Dick’s Sporting Goods. The iShares S&P SmallCap 600 Ucits ETF included exposure to Vista Outdoor and Sturm Ruger.

ETF AUM Holding Weight
iShares S&P SmallCap 600 UCITS ETF $914.2m VISTA OUTDOOR INC

STURM RUGER INC

0.13%

0.13%

iShares Core S&P 500 UCITS ETF

 

$25.8bn WALMART INC

KROGER

0.56%

0.09%

iShares Edge MSCI USA Multifactor UCITS ETF

 

$111.6m WALMART INC 0.45%
iShares MSCI USA Small Cap UCITS ETF

 

$540.2m DICKS SPORTING INC

AMERICAN OUTDOOR BRANDS CORP

VISTA OUTDOOR INC

STURM RUGER INC

0.09%

0.02%

0.03%

0.03%

In his annual letter to shareholders, published in January, Blackrock CEO Larry Fink said “governments [are] failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining.

“As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges. Indeed, the public expectations of your company have never been greater. Society is demanding that companies, both public and private, serve a social purpose.”

Sonia Rach

Sonia joined Last Word Media and the investment industry in 2017 as a reporter, having spent 3 years in HR journalism. While her role consisted of writing about HR related topics such as employee benefits,...

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