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Index investors aren't exposed to IPOs, since the common indexes (SPX etc) don't include IPOs (and if you invest in a YOLO index that does, that's on you).

Also:

> The US led a sharp rebound, driven by a surge in IPO filings and strong post-listing returns following the Federal Reserve’s rate cut.

https://www.ey.com/en_us/insights/ipo/trends

VTI and VT, two of the largest index funds, DO invest in unprofitable companies.

And for the rest (SP 500 etc), these companies are going to fake profits using some sort of financial engineering to be included.

What index fund is buying into IPOs ? The S&P 420?

This isn't really true. IPOs provide access to much more money in a very short time frame. They also allow parties involved to make huge coin before, during and immediately after the process.