EDIT: Answer provided almost immediately- thanks!
I've tried searching for the answer and am not finding it, so I'm hoping someone knows:
When you invest in an index fund, what happens if one of the company disappears?
(Eg it goes bankrupt or it closes)
Especially if it is a higher percentage of the index fund?
Does it differ if it's a mutual fund vs ETFs?
Are the companies that compromise the index fund set in stone?
Do you lose that percentage of your investment, or does it get reallocated into the other companies already in the index fund and the percentages for all get adjusted?
Does the whole index fund get shut down, and money refunded or lost?
Or does the manager/s of the index fund, find a different company to sub in for the company that no longer exists?
Does this still happen if it's a passive fund?
(Are they already swapping companies in and out if some are performing badly? I haven't been watching the complete makeup of funds I've already invested in to notice if they changed since I bought shares)
I understand/assume there'd be a huge value loss immediately if this happened eap with large companies, so I'm not asking about the value per se, but what then happens with the fund?
(I realised a lot of the index funds have the same couple of major companies making up a solid chunk of their allocation. I realise the likelihood of eg Amazon suddenly shutting down is incredibly minimal, and I do realise there are likely legal protections in place to prevent this occurring, but it made me very curious with "but what if?!!". When I've tried to search for the answer, the search engines keep only giving me information for if the broker/fund management company closes- which is NOT what I'm curious about)