West Virginia’s $667 million college savings investment plan will no longer invest in China-based companies, according to the state’s chief financial officer. In an announcement on April 17, West Virginia Treasurer Riley Moore stated that the state will be moving funds from the plan, known as SMART529, into a fund that excludes investments in Chinese companies. This decision was made after a thorough study showed that avoiding Chinese investments aligns with the best interests of families participating in the plan.
Mr. Moore emphasized the fiduciary duty to act in the best financial interests of SMART529 plan participants. He believes that excluding Chinese investments from the portfolio will maximize returns while reducing exposure to potential regulatory and geopolitical risks associated with investing in Chinese companies.
The decision to move funds away from Chinese investments was made in late 2021, coinciding with Dimensional Fund Advisors creating a new equity portfolio fund that does not include Chinese investments. An analysis by Dimensional showed that the China-excluding fund outperformed traditional emerging markets funds since its inception.
Additionally, investment consultant company NEPC warned of significant investment risks related to geopolitical tensions between Beijing and Washington and China’s domestic policies that can lead to volatility in Chinese stocks.
This move is not the first time West Virginia has reconsidered business dealings with China. In March 2023, Gov. Jim Justice signed a law banning the purchase of West Virginia farmland and property by citizens of countries on the U.S. Department of State’s “Country of Particular Concern” list during tax sales.
West Virginia has also taken steps to pull assets from financial institutions that prioritize climate goals over business goals. In 2021, Mr. Moore led a coalition of state treasurers, auditors, and comptrollers in pushing back against banks that boycott traditional energy industries.
The coalition, representing over $600 billion in public assets, pledged to take collective action against the economic boycott of traditional energy production industries by U.S. banks. Mr. Moore criticized the use of climate change as a guise for anti-American reforms that harm the country’s competitiveness against nations like Russia and China. Could you please rephrase that?
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