You might be invested in gun stocks. Here’s how to tell

Recent mass shootings have prompted major retailers like Walmart to reconsider their stance on ammunition sales and open carry policies.

As an investor, you may want to ask yourself whether you are supporting the gun industry through your investment portfolio.

Because many companies have ties to weapons — either directly or indirectly — chances are the answer to that question is yes.

That may come as a surprise if you haven’t been actively seeking weapons stocks. Even just owning a general index or mutual fund could give you some exposure — even in a retirement fund like your 401(k).

There are two gun manufacturers that are publicly traded U.S. companies: American Outdoor Brands, parent of gunmaker Smith & Wesson, and Sturm, Ruger & Co.

Both are small capitalization companies. To be invested in those companies, you would have to own a fund with exposure to small cap stocks, according to Jon Hale, head of sustainable investing research at Morningstar.

Those holdings could come in a variety of forms. You could own a total market index fund, extended market fund or a small cap index fund that includes those two companies, Hale said.

“Chances are, if you are an investor who has small cap exposure and it’s an index fund, you’re going to have exposure to those two companies,” Hale said.

In contrast, actively managed funds that include small caps are less likely to invest in either company. Out of 500 funds in that category, just 32 included Sturm Ruger and 24 had positions in American Outdoor Brands, according to Hale’s research.

One other company, Vista Outdoor, sold its gun manufacturing division, Savage Arms, in July. The company still manufactures ammunition.

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A traditional S&P 500 index fund would focus on larger cap stocks, and therefore is not likely to include those companies.

But that doesn’t necessarily mean that you don’t have financial ties to guns or weapons, said Andrew Behar, CEO of As You Sow, a non-profit foundation focused on corporate social responsibility.

Behar’s company provides a website, Weapon Free Funds, where you can see how specific funds score on weapons exposure.

A search for a traditional S&P 500 fund, the SPDR S&P 500 ETF, for example, shows that it is exposed to 16 weapons stocks, including 15 with ties to military contractors and one to civilian firearms.

The top holdings with exposure to weapons, in terms of dollars invested, include Berkshire Hathaway Inc., Boeing Co. and Walmart Inc.

Admittedly, it is difficult to achieve 100% freedom from ties to weapons in your portfolio, Behar said.

But you can see how all of the funds in your 401(k) or other investments score and rearrange what you own accordingly.

“If people really want to do something, they can disconnect themselves from these weapon industries,” Behar said. “It’s not difficult, and it won’t take them more than a few minutes.”

If all of the funds in your 401(k) plan have high exposure, then it is time to talk to your plan administrator and ask for changes, Behar said.

One surefire way to exclude firearms from your portfolio is to invest in strategies that specifically exclude gun stocks, according to Hale. Examples of small cap funds that do that include Calvert Small-Cap, Walden Small Cap and Walden SMID Cap.

One thing to keep in mind about the exposure you do have: It might not have a materially significant impact on your returns. For example, Walmart, the largest retailer with exposure to guns, is about 0.6% of large cap indexes, Hale said.

Yet because so many funds include that company — including active managers with larger positions — a lot of investors have exposure to Walmart.

You may also want to try another tack: watching to see how your funds engage with the company on weapons issues.

A number of mutual fund asset managers include engagement reports that detail those efforts with their proxy vote filings with the Securities and Exchange Commission, Hale said. The most recent deadline for those filings was Aug. 31.

Walmart recently announced changes to its ammunition sales policies following two shootings at its stores this summer.

The CEO of Calvert, a provider of responsible investment funds, recently thanked Walmart CEO Doug McMillon for the change.

“While Calvert engaged formally and in writing to make our views known to Walmart, we are certain that ours was just one of many voices that spoke up — and were heard,” Calvert Research and Management President and CEO John Streur wrote in a blog post.

“Activism and engagement, especially when done strategically and in a manner consistent with long-term value creation, can work,” Streur said.