The decision came into effect on Monday, as a result of which several index providers, including MSCI, FTSE, S&P Dow Jones and JP Morgan, announced that they would remove more Chinese companies from their indexes.
Thus, the world’s two largest fund managers will have to find new space with billions of dollars in assets, as a lot of money was held in these very indices, so they also had indirectly significant exposure in blacklisted Chinese companies.
Vanguard’s FTSE Emerging ETF is one of three funds with the highest exposure to 5 that have been banned from Chinese companies. The BlackRock iShares Core MSCI Emerging Markets ETF has a similarly large exposure to the Chinese market.
According to Morningstar, 11 BlackRock iShares ETFs and 2 Vanguard ETFs and index funds have billions of exposures in sanctioned Chinese securities.
According to the article, other major service providers also have significant exposure to sanctioned Chinese companies, such as Invesco, HSBC, State Street, DWS and Hang Seng Investment Management.
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