Gun Violence: Your Investments Can Speak.

The recent events in Los Vegas can be depressing for two reasons; first, the tragic loss of life is horrific. On top of that is the realization that common-sense gun control is a political long-shot for the moment.

Is there anything one can do? Yes – two ways. Continue on with conventional political pressure – call your congressperson, senator, or any representative and let them know your views. At the same time – look at your investment portfolio.

Over the past several years there has been tremendous growth in SRI – Socially Responsible Investing. The premise is that investments must pass through Social Responsibility filters before they can be included in your portfolio. Currently, there are a wide variety of funds that do not invest – or limit investments – in gun manufacturers. I will not go into them here, I just want to touch on some common objections to SRI.

Objection #1 – Your returns will suffer. The magnitude of this issue will vary by manager and their investment style. If they run a concentrated portfolio and a social screen would kick-out one of their favorite investments, the impact could be meaningful.

If your manager utilizes broad diversification and factor tilts, the impact is lessened, as other investments can serve as substitutes. The result is just a negligible impact on performance (if at all).

Objection #2 – SRI is expensive. Yes, there is extra work for an SRI fund and it will raise costs somewhat. This issue is always present in investments, and can be mitigated by looking to the fund families that worry about costs. Vanguard, Dimensional Fund Advisors and TIAA (amongst others) are managers that have SRI offerings and worry about the final cost to investors.

The bottom line is that you can deploy your investment funds in a manner that is more closely aligned with your values. The SRI universe is much more developed and accessible today. It is maddening to feel there is little you can do to affect change, but knowing your capital is deployed in investments you can be proud of might help.

 

.