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BlackRock unveils line of gun-free investment products

Walmart changes firearms policy

In another indication that the firearms industry is under review by consumers and investors, the biggest money manager on the planet is offering clients new ways to opt out.

BlackRock (BLK) will exclude gun manufacturers and retailers from some of its current and future exchange-traded funds (ETFs). Retailers including Kroger (KR), Walmart (WMT) and Dick's Sporting Goods (DKS) are among the companies to be screened out of a line of environmental social and governance-focused (ESG) funds, a BlackRock spokesperson confirmed to CBS MoneyWatch.

The retailers were among those who said they would no longer sell guns to anyone under 21 after the school shooting in Parkland, Fla., in February. 

Among the publicly traded firearms makers in the U.S. are American Outdoor Brands (AOBC), Vista Outdoor (VSTO) and Sturm, Ruger (RGR). 

BlackRock is removing makers and sellers of guns from its current lineup of seven ESG funds, and it intends to offer new ETFs and pooled funds to retirement savings plans that prohibit gunmakers and retailers. 

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BlackRock signaled that a plan was under consideration in early March, and now the Thursday announcement means institutional investors such as U.S. pension plans can invest in gun-free funds for employee retirement programs like 401(k) plans. BlackRock said the new lineup comes in response to client demands and presumably could involve pensions in at least a dozen states that own gun stocks.

BlackRock's gun-free ETFs or 401(k) plans could provide a smoother route for pension funds managed for public school teachers in states such as Florida, where an assault rifle made by American Outdoor was used to kill 17 people at a high school in Parkland. The Florida teachers' fund owns shares of American Outdoor and has been under pressure by educators to divest. 

New Jersey's public-employee pension system recently sold its $1.9 million stake in Vista Outdoor, which makes semi-automatic rifles, but officials are reportedly still debating another $30 million of investments in companies that make other types of firearms and ammunition.

Divesting from controversial industries or companies isn't easy, as state comptrollers, including New York's Thomas DiNapoli, have found. Weeks after the 2012 elementary school shooting in Newtown, Connecticut, DiNapoli vowed to end state pension fund investments in gunmakers. But the edict doesn't apply to its passive investments, and the state's retirement fund has since reportedly increased its investment in one gunmaker, Olin (OLN), which owns the Winchester brand of rifles and ammo.

After the Valentine's Day shooting in Parkland, BlackRock publicly disclosed questions it was asking gunmakers and retailers, including about gun safety, background checks, staff training and litigation risks. 

In his annual letter to shareholders, BlackRock CEO Larry Fink wrote of "governments 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."

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