By Tim McLaughlin
BOSTON (Reuters) - Some of the largest U.S. asset managers profiting directly from gunmakers' retirement plans are siding with the investment needs of workers while they review ways to address the sort of gun violence that left 17 dead at a Florida high school.
As a growing list of U.S. companies say they will snub the gun manufacturing industry or cut ties to the National Rifle Association (NRA), many of the leading money managers are maintaining an agnostic approach in their relationship with companies such as Sturm Ruger & Company Inc (N:RGR) and American Outdoor Brands Corp (O:AOBC), maker of Smith & Wesson handguns and rifles.
The national conversation about guns and their place in American society has reached a fevered pitch in the wake of the Feb. 14 massacre at Marjory Stoneman Douglas High School in Parkland, Florida.
American Funds, JPMorgan Chase & Co Inc (N:JPM), MassMutual and T. Rowe Price Group Inc (O:TROW) are among the top managers of about $1.5 billion in retirement plan assets at the largest U.S. gun and ammunition makers, according to Department of Labor disclosures. All of the companies declined to comment for this story.
(To see a list of the money managers in the 401(k) plans offered by the biggest U.S. gun and ammunition makers, click here: http://tmsnrt.rs/2BSE84k )
They earn fees for managing the money deposited into their mutual funds offered in 401(k) retirement accounts for gun industry workers. Employers typically match a portion of workers' contributions.
Vanguard Group, the largest U.S. mutual fund company, said it is interested only in meeting the needs of plan participants by choosing strategies that give them the best chance for investment success.
"Sector or company type does not enter into this assessment," Vanguard spokeswoman Carolyn Wegemann said.
John Hancock, which manages money in the 401(k) plan for handgun maker Glock Inc, said it has an obligation to serve the needs of workers.
“We are reviewing ways that our company, and companies like ours, can help address the issue of gun violence in the United States,” John Hancock spokeswoman Beth McGoldrick said.
STRANGE BEDFELLOWS
To be sure, the amount of assets in the largest firearms retirement plans are a rounding error to a mutual fund industry that manages about $17 trillion in assets. Three Vanguard funds offered in the 401(k) plan for Smith & Wesson workers, for example, managed about $16.2 million assets, according to the plan's latest annual report. Management fees for Vanguard on that account would be less than $100,000 a year.
On a similar scale, BlackRock Inc's (N:BLK) Equity Dividend I Fund manages about 5 percent of the $68 million in assets in the NRA's 401(k) plan. But BlackRock, the world's largest asset manager, is one of a handful of big investors that has said publicly it will talk to gunmakers “to understand their response” to the deadly shooting on Valentine's Day.
U.S. asset manager State Street Corp (N:STT) also said it plans to seek details from gunmakers on how they will support the “safe and responsible use of their products,” adding to pressure on the industry.
Funds managed by T. Rowe Price are the largest holdings in an Olin Corp (N:OLN) retirement plan with about $690 million in assets, according to the latest Department of Labor disclosure. Olin makes Winchester ammunition and specialty chemicals.
Joe Keefe, president of Impax Asset Management, which runs funds focused on socially responsible investing, said he does not think it is likely any of his firms would end up in the 401(k) plan of a firearms company.
"I think they would be unlikely to include funds in their 401(k) line-up that expressly forbid investing in weapons manufacturers," Keefe said.
But the 401(k) plan for Glock offers such a fund. The Domini Impact Equity Fund, which has screened out gun stocks for more than two decades, is one of many investment options in the retirement plan for Glock workers. The fund managed about $34,000 of the Glock plan’s $7.8 million in assets, according to the latest Department of Labor report.
How the Domini fund became an investment option is not known. Glock did not return messages seeking comment.
"I guess there is someone at Glock who prefers to invest in funds that wouldn't buy a gun manufacturer," said Amy Domini, a founder of the Domini Impact Funds. "I'm a big believer that individuals should have choice."