- Assets under management: $27.17 bln
- PE allocation: 14.2 pct
- Why this is important: Other endowments may be forced to take a stand as well
Yale University‘s endowment will stop investing in retail outlets that market and sell assault weapons to the general public.
The policy follows a determination by Yale’s advisory committee that mass shootings cause incontrovertible societal harm and retailers supplying assault weapons to the public cause grave social harm, an Aug. 21 statement said.
The $27.17 billion Yale endowment had a 14.2 percent allocation to PE as of June 30, 2017.
It is unclear whether Yale’s private equity portfolio has any investments in traditional retail distributors, promoters and dealers who organize and sell assault weapons at gun shows.
Yale Investments Office did not return calls for comment for this article.
The new policy is an attention-grabber, said an investment manager at a university endowment. It will compel other university endowments to address the issue as well, he said. At the very least, he said, endowments can pressure big asset managers through which they invest to take action.
For instance, BlackRock, the biggest institutional owner of firearms stocks, said it had opened discussions with gunmakers and retailers to engage them, Bloomberg reported in March.
California State Teachers’ Retirement System has also established a policy that excludes it from gun-related investments made by its private equity managers, Buyouts reported.
CalSTRS in 2015 sold its exposure to a PE gun investment in Remington Outdoor.
In May the pension system said it would work with its PE managers on its exposure to such investments. One manager in the portfolio that would be affected is Kohlberg Kravis Roberts. The PE firm is invested in Academy Sports + Outdoors, which sells an array of firearms, including military-style semiautomatic assault rifles, Buyouts reported.
Despite increased pressure from student activists on various issues like fossil fuels, most endowments have refused to divest. They refer to their fiduciary duty to invest for highest returns in all asset classes, the source said.
This is not the first time Yale’s endowment, considered a pioneer in endowment investing, has taken a stand on ethical investing. It divested companies that operated in apartheid South Africa and oil companies in Sudan.
More recently Yale adopted proxy-voting guidelines with respect to tobacco companies and private prisons.
Among the college endowments, University of California divested from firearms producers after the 2012 Sandy Hook shooting in Newtown, Connecticut.
Action Item: Read more here: Yale Endowment Report 2017