Americans have increasingly invested in passive S&P 500 Index funds, with Vanguard and BlackRock managing nearly $2 trillion in assets. However, the S&P 500 Index committee has opted to maintain its 12-month waiting period for new stock inclusions, meaning SpaceX, which is set to begin trading on the Nasdaq with a valuation of $1.75 trillion, will not be part of the S&P 500 until mid-2027.
This decision contrasts with the Nasdaq and Russell index committees, which are updating their rules to include new mega-cap stocks more swiftly. Analysts like Todd Sohn from Strategas Securities suggest that investors seeking exposure to SpaceX will need to turn to the Nasdaq 100 or Russell 1000 instead of traditional S&P 500 funds like VOO or SPY.
The decision has sparked debate among experts, with some arguing that it sets a precedent that could affect future IPOs, including those of OpenAI and Anthropic. Additionally, investors have shown interest in thematic ETFs that already hold SpaceX shares, and new leveraged ETFs are being launched to provide amplified exposure to SpaceX's stock.
Overall, the S&P 500's decision to exclude SpaceX highlights a potential divergence in performance among major U.S. indexes and suggests that investors may need to explore alternative investment vehicles to gain exposure to emerging mega-cap stocks