New York-based private equity fund Cerberus is to sell its stake in the company which made the rifle used in the Sandy Hook Elementary School massacre.

Under pressure from its investors Cerberus released a statement saying it was "shocked and deeply saddened" by the shootings which occured in Newtown, Connecticut last Friday.

Cerberus described the shooting deaths of 20 children and 7 adults as a "watershed event that has raised the debate on gun control to an unprecedented level".

"It is not our role to take positions, or attempt to shape or influence the gun control policy debate. That is the job of our federal and state legislators. There are, however, actions that we as a firm can take. Accordingly, we have determined to immediately engage in a formal process to sell our investment in Freedom Group," it said.

Freedom Group is the manufacturer of the Bushmaster .223 assault rifle used by gunman Adam Lanza.

The California State Teachers' Retirement System, which is an investor in Cerberus and operates one of the biggest pension funds in the US, had said on Monday that it was reviewing its investment with Cerberus over concerns about its shareholding in Freedom Group.