Investing in Chinese Companies

Marco Rubio has been against TSP investing in China for the past 3 years – and his efforts continued by proposing legislation.

Back in 2020, the Federal Retirement Thrift Investment Board (FRTIB) was set to switch the market index that the I-Fund tracks. While the current index only allows for investments in a handful of countries, the updated index would’ve allowed for investments across the globe… and that included China. Along with a few other politicians, the Republican Senator from Florida, Marco Rubio, made political objections to the move. As there’s been no mention from the FRTIB about switching the I-fund’s index since. The idea has been essentially abandoned since the summer of 2020.

Learn about the Thrift Savings Plan at our No-Cost webinar and make sure you’re ready for retirement!

Then in 2021, the Florida Senator first proposed the TSP Fiduciary Act – which would adjust the TSP board’s fiduciary duty and prevent any investments in Chinese companies. The introduced legislation was never considered by a vote.

Although the I-fund’s index doesn’t look to be changing soon, the FRTIB did open up the mutual fund window in June of last year, essentially giving TSP investors the option to invest in around 5000 more mutual funds (albeit with some caveats) – and some of these funds contained Chinese companies. Rubio tried to delay the opening of the window so the FRTIB could remove all the options that contained Chinese companies. The TSP’s board did not comply with the Senator’s wishes, prompting the Senator to send a second letter a few months later. The FRTIB has repeatedly responded to Rubio’s concerns claiming national security concerns regarding financial organizations are to be handled by OFAC (Office of Foreign Asset Control) and not the FRTIB.

The TSP Fiduciary Act

With a new Congress convened, the Florida legislator has reintroduced the bill originally brought forth two years ago. If passed, it would enact the following:

  • Require the FRTIB to consider matters of national security as part of their fiduciary duty.
  • Prevent TSP investment options from containing Chinese companies.
  • TSP board decisions would become subject to review by the Labor Secretary, who would consult with the Department of Defense, Department of Homeland Security, and the attorney general of national security concerns.

Along with their argument that such matters are already handled by OFAC, the FRTIB has also noted that restricting millions of TSP participants’ investment choices with regulations that don’t apply to any other defined contribution plan (like private 401ks), or any other financial institution, isn’t fair. Their recent response to the reintroduction of the TSP Fiduciary Act echoed their previous arguments, stating that inserting policy decisions into their fiduciary responsibility is nonsensical because the two are “fundamentally incompatible.”


Until Next Time,

Benefits Ben, STWS

**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.

Investing in Chinese Companies

TSP Fiduciary Act - Prevent TSP from Investing in Chinese Companies