Introduction
As an investor, I often weigh financial returns against personal values. One area that has gained traction in recent years is anti-gun mutual funds, which exclude firearms manufacturers, retailers, and related companies from their portfolios. These funds cater to investors who prioritize social responsibility alongside profitability.
Table of Contents
What Are Anti-Gun Mutual Funds?
Anti-gun mutual funds fall under the broader category of socially responsible investing (SRI) or environmental, social, and governance (ESG) funds. They avoid companies involved in:
- Firearms manufacturing (e.g., Smith & Wesson, Sturm, Ruger & Co.)
- Ammunition production (e.g., Olin Corporation, Vista Outdoor)
- Gun retailers (e.g., Dick’s Sporting Goods, Walmart’s firearm divisions)
These funds apply negative screening, deliberately excluding industries that conflict with investors’ values.
Key Players in Anti-Gun Investing
| Fund Name | Ticker | Assets Under Management (AUM) | Expense Ratio |
|---|---|---|---|
| Pax Ellevate Global Women’s Leadership Fund | PXWEX | $1.2B | 0.55% |
| TIAA-CREF Social Choice Equity Fund | TICRX | $10.4B | 0.45% |
| Vanguard FTSE Social Index Fund | VFTSX | $9.8B | 0.12% |
Note: These funds may not be exclusively anti-gun but exclude firearms as part of broader ESG criteria.
Performance Analysis: Do Anti-Gun Funds Deliver?
A common concern is whether excluding gun-related stocks hurts returns. To assess this, I compare the 5-year annualized returns of an anti-gun fund (VFTSX) against the S&P 500.
| Fund/Index | 5-Year Return (2019-2024) | Volatility (σ) |
|---|---|---|
| Vanguard FTSE Social Index (VFTSX) | 9.2% | 15.3% |
| S&P 500 Index | 10.5% | 14.8% |
The underperformance (~1.3% annually) suggests a slight trade-off, but not a drastic one.
Mathematical Perspective: Risk-Adjusted Returns
The Sharpe ratio measures risk-adjusted performance:
Sharpe\ Ratio = \frac{R_p - R_f}{\sigma_p}Where:
- R_p = Portfolio return
- R_f = Risk-free rate (assume 2%)
- \sigma_p = Portfolio volatility
For VFTSX:
Sharpe\ Ratio = \frac{9.2 - 2}{15.3} = 0.47For S&P 500:
Sharpe\ Ratio = \frac{10.5 - 2}{14.8} = 0.57The S&P 500 has a better risk-adjusted return, but the difference is marginal.
Ethical vs. Financial Trade-Offs
Investors must decide: Is avoiding gun stocks worth potential underperformance?
Arguments For Anti-Gun Funds:
- Aligns with personal values – Some investors prioritize social impact over marginal gains.
- Reduced regulatory risk – Firearms companies face political scrutiny, which may impact long-term profitability.
Arguments Against Anti-Gun Funds:
- Limited diversification – Excluding an entire sector may increase volatility.
- Performance lag – As shown, some ESG funds trail the broader market.
Case Study: The Impact of Mass Shootings on Gun Stocks
After high-profile shootings, gun stocks often surge due to fears of stricter regulations (panic buying). However, ESG funds avoid this volatility.
Example:
- Smith & Wesson (SWBI) rose 25% after the 2022 Uvalde shooting.
- Anti-gun funds missed this spike but also avoided long-term reputational risks.
How to Invest in Anti-Gun Mutual Funds
- Screen for ESG Funds – Use tools like Morningstar’s Sustainability Rating.
- Check Holdings – Ensure the fund excludes firearms manufacturers.
- Compare Fees – Lower expense ratios improve net returns.
Conclusion
Anti-gun mutual funds offer a way to invest in line with ethical beliefs. While they may slightly underperform traditional funds, the difference is often negligible. For investors who prioritize social responsibility, these funds provide a viable alternative without sacrificing long-term growth.
Would I invest in them? If my primary goal were aligning my portfolio with my values, yes. But if maximizing returns were the sole focus, I might opt for a broader index fund. The choice depends on individual priorities.
Final Thoughts
The rise of anti-gun investing reflects a broader shift toward values-based finance. Whether this trend grows depends on investor demand and regulatory changes. For now, these funds remain a niche but meaningful option in the SRI landscape.
