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Vanguard Puts Gun Stocks In ESG Index

Say Contributor

We all make mistakes, even investment fund giants, as Vanguard has admitted it placed gun stocks in a gun-free index. Oops Daisy As reported by Bloomberg, Vanguard bought stock in gun manufacturer Sturm Ruger & Co and mistakenly placed it in their ESG index for more than a month, which typically does not include stocks from companies that sell guns or ammunition. Index Exposure Vanguard developed the Vanguard US ESG Stock ETF to help facilitate investing in companies that meet the criteria for ESG investing, which is a way for investors to buy shares in companies or funds that meet certain ethical benchmarks. Their fund is tied to the FTSE Russell’s US All Cap Choice index, which, in theory, does not include gun manufacturers or non-renewable energy companies. The Russell index was rebalanced in June, and accidently included 11 stocks that don’t qualify as ESG. In addition to 219 shares of Sturm Ruger worth about $9,000, the index also included shares in non-ESG companies such as private prison operator Geo Group Inc. and defense contractor Halliburton Co. Vanguard spokesman Freddy Martino apologized to shareholders for the error. Passive Aggressive Index funds, more or less created by Vanguard founder Jack Bogle, are so popular that they may one day control the stock market. ESG index funds will likely continue to explode in popularity as well, as Wall Street scrambles to appease millennial investors. But, as Vanguard’s mishap shows, passive investing continues to have holes when it comes to meeting the complexities of ESG that might take a human being at the wheel to maneuver. More good news for money managers. -Michael Tedder Photo: Joshua Roberts / RUETERS