The question deserves serious consideration, as it involves a widespread misunderstanding of how financial markets operate. Let us start at the beginning. An ETF (Exchange Traded Fund, or tracker) is a listed fund that seeks to replicate the performance of an index. When you buy a share of a CAC 40 ETF, you are not directly purchasing shares in the forty companies that make up the index. You are buying a share of a fund, which itself holds those stocks, or a substitute for them. This is where the mechanics begin to diverge from common intuition.

The secondary market

The first thing to understand is that almost all stock market transactions take place on what is known as the secondary market. Think of it as a second-hand market. When you buy a share of TotalEnergies, you are not buying it from TotalEnergies; you are buying it from another investor who has decided to sell. The company itself receives nothing. It raised its capital much earlier, during its initial public offering (IPO) or through a capital increase, on what is called the primary market.

The same applies to ETFs. When you purchase shares of a CAC 40 tracker through your brokerage app, your money goes to the person or institution selling those shares, not to the companies within the index. TotalEnergies, LVMH, and Airbus do not see a cent of your transfer. But that is not the whole story.

The indirect link through valuation

There is a less visible mechanism through which your ETF purchase can indirectly affect the underlying companies. Large ETFs need to regularly buy the stocks that compose their index, particularly when new shares are created to meet investor demand. These purchases occur on the secondary market, but they fuel demand for the securities involved, which can support their share prices. And when a stock rises, the company's market capitalization increases, which facilitates future capital raises, improves its credibility with lenders, and can lower its financing costs.

This is a real link, but it is indirect, diffuse, and far removed from the idea of direct funding. Your ETF, like your purchase on the secondary market, will not be used to build STMicroelectronics' next chip factory. It contributes, at the margin and alongside millions of other investors, to maintaining a valuation level that allows companies to continue operating as they do. The ETF catalyzes this mass effect.

A technical detail further complicates matters: not all ETFs actually hold the index's stocks. Some use synthetic replication, meaning they use derivatives to replicate the index's performance without ever buying the underlying securities. In this case, the link between your investment and the CAC 40 companies is even more tenuous.

What if I put my money into an S&P 500 ETF?

A particularly sensitive question, especially for a French investor: does placing one's savings in a tracker replicating the S&P 500 mean financing the American economy at the expense of the French economy? The answer is more nuanced than a simple yes or no.

If you buy a share of an S&P 500 ETF on the market, your money first goes to the seller of that share, not to Apple, Microsoft, or Nvidia. It does not go directly toward building a factory in the United States or financing a data center in Virginia. In this regard, the mechanism is the same as for a CAC 40 ETF: the transaction usually takes place on the secondary market.

However, it would be premature to conclude that the choice is neutral. By buying an S&P 500 ETF, you are directing your savings toward exposure to large American corporations. If demand for these ETFs becomes massive, it can lead to the creation of new shares, and thus additional purchases (direct or indirect) of the index's securities. This is not direct financing of the U.S. economy, but it is additional demand for its financial assets.

The nuance also applies to the choice of provider. Buying an Amundi S&P 500 ETF rather than a BlackRock S&P 500 ETF does not fundamentally change the exposure: in both cases, you are buying the performance of major U.S. equities. The difference, which lies more in the capture of fees and the financial ecosystem managing the product, is negligible. A French manager may collect the (low) commissions, but the savings themselves remain economically anchored to the American market.

One final point regarding ETFs, regardless of their flag: holding a tracker means delegating voting rights to the manager (BlackRock, Amundi, BNP, Vanguard...). This has become a major debate regarding concentration and the exercise of power. While not the focus here, it is also a form of sovereignty - shareholder sovereignty this time.

What your ETF really changes

Returning to our main subject, two misconceptions should be avoided.

The first would be to believe that an ETF acts like a check sent to the companies in the index. This is not the case. When you buy a share of a CAC 40 or S&P 500 ETF, your money most often goes to another investor selling that share. The underlying companies do not receive your money directly.

But the second misconception would be to conclude that this choice has no effect. On a large scale, demand for an ETF can drive demand for the index's securities, or for the financial instruments used to replicate its performance. This does not directly finance the companies, but it contributes to their valuation.

That is the key distinction. Buying a CAC 40 ETF does not directly finance Michelin, LVMH, or Sanofi. Buying an S&P 500 ETF does not directly finance Apple, Microsoft, or Nvidia. But in both cases, you are participating in the vast valuation mechanism that allows them, when the time comes, to finance their growth under favorable conditions. It is less romantic than one might imagine, but also less futile than one might fear.