By Ric Edelman

Never mix investing with politics, as I wrote in my bestselling book, The Truth About Retirement Plans and IRAs.

Sadly, for millions of American public servants, the board that controls their $600 billion retirement savings plan just did.

The Federal Retirement Thrift Investment Board just halted its plans to include Chinese stocks in the Thrift Savings Plan, the 401(k) equivalent for federal employees and members of the military.

First, some background. The TSP has five core investment choices, including the I Fund, which invests in international stocks. Despite the fact that China is the world’s 2nd largest economy, the fund currently does not invest in Chinese companies. But the board had planned to start doing so – to the tune of 11 percent of the I Fund’s assets. That’s a reasonable allocation, considering that 14 percent of the world’s top 1,000 public companies are headquartered in China.

Now back to politics. A majority on the Thrift Board are apparently upset at China over its behavior during the COVID-19 pandemic – among other beefs – and they therefore aren’t going to allow the I Fund to invest in Chinese stocks.

This concerns me a great deal, because investment management should not be a political football. We are talking about the future financial security of 5.9 million Americans! For a great many federal employees, their TSP account is their largest and only long-term investment account. It’s therefore vital that these employees have the ability to diversify their portfolios as much as possible. To keep Chinese stocks out of the I Fund is not in their best interests.

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