Index Investors: Here's Why the Next Wave of Tech IPOs Could Reshape Your Passive Strategy
SpaceX is already in some indexes.
Overview
One of the most important discussions happening since the Space Exploration Technologies (NASDAQ: SPCX) initial public offering (IPO), and the one that's perhaps the most relevant to the investing community, is how the IPO impacts index investors.
While the SpaceX IPO was the largest in history and highly oversubscribed, there are plenty of investors out there (like me) who wouldn't touch it with a 10-foot pole. That gets complicated, however, because many value investors use passive index investing, whether as the main part or just one element, of their investment strategy.
Details
Since SpaceX has landed on the market as one of the most valuable companies in the world, it's going to be added to many indexes and incorporated into funds that track them. In fact, it's already happening; it was added to the Russell 1000 index at the end of June, just two weeks after going public, and funds that track it will have to buy SpaceX stock to reflect that change. As of this writing, two Vanguard exchange-traded funds (ETFs) that track the Russell 1000, the Vanguard Russell 1000 ETF (NASDAQ: VONE) and the Vanguard Russell 1000 Growth ETF (NASDAQ: VONG), do not list it as a component.
Source
Originally published at www.fool.com.