A look into how funds that track major indexes could be investing in companies with controversial links in China.
An electronic screen in Shanghai displaying the Shanghai Composite Index, the Shenzhen Component Index and the Hang Seng Index, December 5, 2023. Credit: VCP via AP Images
As the U.S. government mulls restrictions on outbound investment into China, a particular area of controversy is financial products through which millions of ordinary investors funnel billions of dollars into the country — index tracker funds.
Such funds enable those who put money into them to track the fortunes of a particular index, like the S&P 500. The funds do this by investing their assets into the companies in proportion to the weighting that each stock has in that index.
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