Big Three Investments in Arms Industry Quantified

 

Weapon Free Funds is a useful site that quantifies the extent of Big Three (Vanguard, BlackRock and State Street) investments in the military industrial complex.

Mutual funds and ETFs are offered by fund managers. These companies manage anywhere between one and several hundred fund portfolios, offered to investors as vehicles to save for their futures.

To rate fund managers, the site takes all the funds in their research universe offered by that fund manager and combine them, treating them as one big portfolio. They then apply the same grading system used for individual funds to this set of combined holdings. What they've found is that the largest fund managers are heavily invested in arms manufacturers, including nuclear and controversial weapons like cluster munitions, anti-personnel landmines, incendiary weapons, and depleted uranium.

These results show the combined exposure of the fund manager's open-end mutual funds and exchange-traded funds domiciled in the U.S. with at least 50% of assets directly invested in stocks. It excludes bond funds, target date funds, and other fund types like closed-end funds, collective trusts, and funds domiciled outside the U.S. This fund manager may have additional military weapon investments in those types of funds. These results ignore any short assets or liabilities held by fund portfolios, accounting only for long fund holdings.

1.      Vanguard

·         Rating D for investments in military weapons with 3% invested across 102 funds

·         Funds analysed 102

·         AUM analysed $5.1T

·         Military contractors 2.98%

·         Nuclear 2.18%

·         Controversial 0.92%

2.      BlackRock

·         Rating D  for investments in military weapons with 3% invested across 313 funds

·         Funds analysed 313

·         AUM analysed $1.8T

·         Military contractors 3.05%

·         Nuclear 2.07%

·         Controversial 0.93%

3.      State Street

·         Rating D for investments in military weapons with 3.2% invested across 106 funds

·         Funds analysed 106

·         AUM analysed $877.8B

·         Military contractors 3.17%

·         Nuclear 2.41%

·         Controversial 1.17%

[“AUM” = Assets Under Management]

Investing in companies involved in producing military weapons is a risky business. Concerns about social impact, human rights, reputation risk, and regulatory risks are just a few of the reasons weapon free investing has been a common component of sustainable investing for decades.

Despite global calls for restraint and nuclear disarmament, new nuclear weapons are being developed in all nuclear armed countries, with investor-owned companies involved in constructing, maintaining, and stockpiling nuclear weapons. Some arms producers also manufacture internationally-banned weapons like cluster munitions, anti-personnel landmines, incendiary weapons, and depleted uranium.