The largest U.S. mutual fund managers, responsible for funds found across thousands of corporate 401(k) plans, have billions invested in nuclear weapons and controversial weapons like white phosphorus and cluster bombs.
Given a choice, many would not want to profit from companies that manufacture weapons of mass destruction.
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.
But despite these risks, fund managers like Vanguard, BlackRock, and American Funds are heavily invested in arms manufacturers, nuclear weapons, and controversial weapons. Our newest analysis looks at the weapon investments of hundreds of mutual fund managers, with a focus on comparing the top 25 largest firms to the 25 largest sustainable fund managers.
Largest fund managers are heavily invested in arms manufacturers
The top 25 U.S. fund managers all earn a D grade or worse, with significant investments in arms manufacturers and major military contractors, including companies involved with nuclear weapons, as well as companies involved with controversial weapons like cluster munitions, anti-personnel landmines, incendiary weapons, and depleted uranium.
Fund managers commonly found in corporate 401(k)s like American Funds, John Hancock Funds, and Franklin Templeton Investments were among the most exposed among the largest fund managers.
Sustainable fund managers often have less weapons exposure
All but two of the top 25 sustainable fund managers earned a C grade or higher, with many having no investments in nuclear weapons, and almost all avoiding investments in controversial weapons. Almost one-third of sustainable fund managers earned an A grade with no identifiable exposure to military weapons.
Sustainable investing has traditionally avoided weapon investments not only for moral reasons, but with the goal of avoiding the financial risk inherent in the business models of arms manufacturers. Research shows that sustainable indexes that screen out nuclear weapons largely track or outperform comparable non-sustainable indexes.
The new Fund Manager Military Weapon Ratings are the latest addition to our Weapon Free Funds investment tool, built to help responsible investors prioritize peace and people over war and violence. The ratings use research from non-profits and ethical investment firms to identify investor-owned companies involved with arms manufacturing, nuclear weapons, and cluster munitions.
The tool includes an action toolkit people can use to help shift their investments, including their company 401(k) savings, away from weapon investments.