No China in Index Funds Act

The No China in Index Funds Act (S 2046) prohibits index funds from investing in companies defined as "Chinese companies" - including those incorporated in China, controlled by the Chinese government, or with significant assets/operations in China. It allows an 180-day transition period for index funds already holding such investments to divest after enactment. Violations could trigger civil penalties up to $250,000 or twice the transaction value, and the Securities and Exchange Commission would issue implementing rules. This directly affects index funds and hedge funds tracking market indexes, requiring them to remove holdings in covered Chinese companies.