Unveiling The 401(K) Link To Private Prisons: A Surprising Investment Connection

Many 401(k)s hold stocks in private prison companies such as CoreCivic and GEO Group. Prison operators are publicly traded, so they can be held in an index fund or ETF as part of a portfolio or retirement account like a 401(k) or IRA. Vanguard and iShares owner BlackRock are the two largest holders of CoreCivic and GEO. Critics argue that coupling private prisons with mutual funds is especially craven, as workers may not have enough money to retire.

Prison companies are publicly traded and held in retirement accounts

Prison operators have been thrust into the spotlight recently since many of them run the controversial immigrant detention centres near the US border with Mexico. Two of these companies, CoreCivic (CXW) and GEO Group (GEO), are publicly traded – so many may hold them in an index fund or ETF as part of their portfolio or retirement account like a 401(k) or IRA without even knowing it. Vanguard and iShares owner BlackRock (BLK) are the two largest holders of CoreCivic and GEO. Both stocks are held mainly in passive funds that mimic indexes that include the companies, such as the S&P Mid Cap 400, Russell 2000 and the benchmark real estate MSCI US REIT Index, as opposed to funds where managers choose to buy them.

When you have a 401(k) or some other type of retirement account through your employer (which is how the majority of us do our investing), you typically have a pretty limited range of good investment options to choose from (if you have any choice at all). Even if you do have a private non-retirement investment account with a broader spectrum of investment options, you still run into the same problem with any mutual fund: they all have a bunch of different stocks in them, so they all contain stocks of at least one or two controversial companies. If you individually sorted through all of the stocks in any given mutual fund, you would find stock of some personally objectionable company in pretty much every single one of them.

Prisons – including not only private prison companies, but also companies that provide services, such as banking and transportation, to government-run prisons.

To couple private prisons with mutual funds—products that prey on workers’ fear that they may not have enough money to retire—is especially craven. Now a worker can refuse to participate in the 401(k) and try to save for retirement herself. But in some cases, an employer will match the amount of money the employee puts into the plan. A DIY approach gives that up—a “major loss,” said Meg Voorhes, director of research at US SIF, a sustainable investing nonprofit. The arrangement boils down to an ugly decision. Pay into a retirement plan that protects you but harms your fellow man.

Such investors might choose to divest as a last resort, after engagement fails. A recent example is the 2018 decision of the California State Teachers’ Retirement System, one of the largest pension funds in the U.S., to divest from private prison companies CoreCivic and GEO Group over their involvement in family separation. However, most institutional investors in the U.S., including the largest ones - banks, pension funds, universities – are not “socially responsible.” For them, the only consideration is the bottom line, and their investment policies do not allow making ethical investment choices. AFSC supports campaigns that aim to change these policies.

Mutual funds include prison companies in their stock

Mutual funds are products that prey on workers' fear that they may not have enough money to retire. They are investments that many people make through their 401(k), which is a retirement account through their employer. Even if you have a private non-retirement investment account, you still run into the same problem with any mutual fund: they all have a bunch of different stocks in them, so they all contain stocks of at least one or two controversial companies.

Prison operators have been thrust into the spotlight recently since many of them run the controversial immigrant detention centers near the US border with Mexico. Two of these companies, CoreCivic (CXW) and GEO Group (GEO), are publicly traded – so many may hold them in an index fund or ETF as part of their portfolio or retirement account like a 401(k) or IRA without even knowing it. Vanguard and iShares owner BlackRock (BLK) are the two largest holders of CoreCivic and GEO. Both stocks are held mainly in passive funds that mimic indexes that include the companies, such as the S&P Mid Cap 400, Russell 2000 and the benchmark real estate MSCI US REIT Index, as opposed to funds where managers choose to buy them.

Prisons – including not only private prison companies, but also companies that provide services, such as banking and transportation, to government-run prisons. Such investors might choose to divest as a last resort, after engagement fails. A recent example is the 2018 decision of the California State Teachers’ Retirement System, one of the largest pension funds in the U.S., to divest from private prison companies CoreCivic and GEO Group over their involvement in family separation. However, most institutional investors in the U.S., including the largest ones - banks, pension funds, universities – are not “socially responsible”. For them, the only consideration is the bottom line, and their investment policies do not allow making ethical investment choices.

AFSC supports campaigns that aim to change these policies. When you have a 401(k) or some other type of retirement account through your employer (which is how the majority of us do our investing), you typically have a pretty limited range of good investment options to choose from (if you have any choice at all). Even if you do have a private non-retirement investment account with a broader spectrum of investment options, you still run into the same problem with any mutual fund: they all have a bunch of different stocks in them, so they all contain stocks of at least one or two controversial companies.

If you individually sorted through all of the stocks in any given mutual fund, you would find stock of some personally objectionable company in pretty much every single one of them. To couple private prisons with mutual funds—products that prey on workers’ fear that they may not have enough money to retire—is especially craven. Now a worker can refuse to participate in the 401(k) and try to save for retirement herself. But in some cases, an employer will match the amount of money the employee puts into the plan. A DIY approach gives that up—a “major loss”, said Meg Voorhes, director of research at US SIF, a sustainable investing nonprofit. The arrangement boils down to an ugly decision. Pay into a retirement plan that protects you but harms your fellow man.

Pension funds invest in prison companies

Prison operators have been thrust into the spotlight recently since many of them run the controversial immigrant detention centers near the US border with Mexico. Two of these companies, CoreCivic (CXW) and GEO Group (GEO), are publicly traded – so many may hold them in an index fund or ETF as part of their portfolio or retirement account like a 401(k) or IRA without even knowing it. Vanguard and iShares owner BlackRock (BLK) are the two largest holders of CoreCivic and GEO. Both stocks are held mainly in passive funds that mimic indexes that include the companies, such as the S&P Mid Cap 400, Russell 2000 and the benchmark real estate MSCI US REIT Index, as opposed to funds where managers choose to buy them.

Prison companies are also invested in by pension funds. Pension funds are one of the largest institutional investors in the U.S. and are not “socially responsible”. For them, the only consideration is the bottom line, and their investment policies do not allow making ethical investment choices.

CoreCivic and GEO Group are two of the largest prison companies in the U.S. and are publicly traded. This means that they are invested in by pension funds and mutual funds that prey on workers’ fear that they may not have enough money to retire. A worker can refuse to participate in the 401(k) and try to save for retirement herself. But in some cases, an employer will match the amount of money the employee puts into the plan. A DIY approach gives that up—a “major loss”, said Meg Voorhes, director of research at US SIF, a sustainable investing nonprofit.

Pension funds are one of the largest institutional investors in the U.S. and are not “socially responsible”. For them, the only consideration is the bottom line, and their investment policies do not allow making ethical investment choices.

Prison companies are also invested in by pension funds. Pension funds are one of the largest institutional investors in the U.S. and are not “socially responsible”. For them, the only consideration is the bottom line, and their investment policies do not allow making ethical investment choices.

Employers match employee contributions to 401(k)

Employers will match the amount of money that the employee puts into the plan. This is a key benefit of the 401(k) plan.

When you have a 401(k) or some other type of retirement account through your employer, you typically have a pretty limited range of good investment options to choose from.

Even if you do have a private non-retirement investment account with a broader spectrum of investment options, you still run into the same problem with any mutual fund: they all have a bunch of different stocks in them, so they all contain stocks of at least one or two controversial companies.

If you individually sorted through all of the stocks in any given mutual fund, you would find stock of some personally objectionable company in pretty much every single one of them.

Prison operators have been thrust into the spotlight recently since many of them run the controversial immigrant detention centers near the US border with Mexico. Two of these companies, CoreCivic (CXW) and GEO Group (GEO), are publicly traded – so many may hold them in an index fund or ETF as part of their portfolio or retirement account like a 401(k) or IRA without even knowing it.

Divestment is a last resort to stop funding state violence

Prison operators have been thrust into the spotlight recently since many of them run the controversial immigrant detention centers near the US border with Mexico. Two of these companies, CoreCivic (CXW) and GEO Group (GEO), are publicly traded – so many may hold them in an index fund or ETF as part of their portfolio or retirement account like a 401(k) or IRA without even knowing it. Vanguard and iShares owner BlackRock (BLK) are the two largest holders of CoreCivic and GEO. Both stocks are held mainly in passive funds that mimic indexes that include the companies, such as the S&P Mid Cap 400, Russell 2000 and the benchmark real estate MSCI US REIT Index, as opposed to funds where managers choose to buy them.

Such investors might choose to divest as a last resort, after engagement fails. A recent example is the 2018 decision of the California State Teachers’ Retirement System, one of the largest pension funds in the U.S., to divest from private prison companies CoreCivic and GEO Group over their involvement in family separation. However, most institutional investors in the U.S., including the largest ones - banks, pension funds, universities – are not “socially responsible”. For them, the only consideration is the bottom line, and their investment policies do not allow making ethical investment choices.

When you have a 401(k) or some other type of retirement account through your employer (which is how the majority of us do our investing), you typically have a pretty limited range of good investment options to choose from (if you have any choice at all). Even if you do have a private non-retirement investment account with a broader spectrum of investment options, you still run into the same problem with any mutual fund: they all have a bunch of different stocks in them, so they all contain stocks of at least one or two controversial companies. If you individually sorted through all of the stocks in any given mutual fund, you would find stock of some personally objectionable company in pretty much every single one of them.

Prisons – including not only private prison companies, but also companies that provide services, such as banking and transportation, to government-run prisons.

To couple private prisons with mutual funds – products that prey on workers’ fear that they may not have enough money to retire – is especially craven. Now a worker can refuse to participate in the 401(k) and try to save for retirement herself. But in some cases, an employer will match the amount of money the employee puts into the plan. A DIY approach gives that up – a “major loss,” said Meg Voorhes, director of research at US SIF, a sustainable investing nonprofit. The arrangement boils down to an ugly decision. Pay into a retirement plan that protects you but harms your fellow man.

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