Do I own SpaceX without realising?

Did you hear all the excitement over the flotation of SpaceX but decide to skip the opportunity to buy the shares? You won’t have been alone; analysts such as Morningstar’s regarded the company as highly overvalued and its shares have already suffered a peak-to-trough fall of 35%.

But even if you ignored the ‘initial public offering’ or IPO, you may find yourself with a stake in the company by default.

• Read: SpaceX IPO: what you need to know

This is because some popular passive funds that track US or global indices will have no choice but to invest in SpaceX if the stock is added to the relevant index. For example, SpaceX has already joined the FTSE World index, so funds that track that index have to invest in SpaceX shares.

Not all passive funds that include American shares will end up with a stake in Elon Musk’s space company, however. This is because the major index compilers, the likes of S&P, MSCI, FTSE Russell and Nasdaq, have different rules about index composition and when stocks become eligible to join. Here we outline which major indices are likely to include SpaceX and which are not – or at least not yet.

• Looking for personalised financial advice? Our advisory service can help you plan for your next step

S&P indices

The most famous index run by S&P, the S&P 500 of America’s biggest listed companies, will not include SpaceX for the time being and the stock looks likely to be excluded from it for at least a year. S&P requires companies to be profitable for a year before they can be considered for inclusion in the S&P 500 and SpaceX is currently loss-making.

However, the company does qualify for inclusion in other S&P indices, such as the S&P Global BMI (Broad Market Index), S&P World, Dow Jones Global and Dow Jones US, and was added to them last week.

MSCI indices

MSCI’s rules allow large newly floated companies to join its indices on an accelerated basis. As a result, SpaceX will be admitted to indices such as the MSCI World and the MSCI ACWI (All Country World Index) on 29 June.

FTSE indices

Although FTSE Russell, part of the London Stock Exchange Group, is famous for British indices such as the FTSE 100, it also compiles indices for other countries and regions, as well as globally. It too has a ‘fast-track’ entry programme for large flotations and as a result SpaceX has already been added to indices such as the FTSE All-World, FTSE World and FTSE Global All Cap.

Nasdaq indices

Nasdaq is the American exchange focused on fast-growing technology companies and is the stock market on which SpaceX is listed. Its rules allow newly floated companies to join its Nasdaq-100 index after 15 trading days, so SpaceX, whose IPO was on 12 June, is likely to be added shortly.

The fund best-sellers that will own SpaceX

Several tracker funds popular with Fidelity customers already include SpaceX or will do so shortly.

The best-selling fund among our ISA and SIPP investors in May was Fidelity Index World. It tracks the MSCI World index, which will include SpaceX from next Monday. Other trackers among the top 10 best sellers were the Legal & General Global Equity Index Fund, which tracks the FTSE World Index, the Vanguard FTSE Global All Cap Index Fund and the HSBC FTSE All-World Index Fund. As SpaceX has already been added to these FTSE indices, the funds will have followed suit already or will do so shortly.

Our ETF best-sellers’ list for May also contained several tracker funds that already own SpaceX or will do so soon. They include the Vanguard FTSE All-World ETF, the Vanguard FTSE Developed World ETF, the State Street SPDR MSCI All Country World ETF and the Invesco FTSE All-World ETF.

Investors who would prefer to avoid owning SpaceX have several options. Some indices, most notably the S&P 500, will not include the company at least for the moment, while an ‘equal-weighted’ tracker will have very limited exposure to the stock. Indices that avoid American shares or large companies will obviously not include SpaceX. Active fund managers, naturally, can choose to avoid it.

Got a burning question you want to ask? Why not drop us a line. Click here to ask your question.

• Read: How can I avoid investing in the Magnificent 7 and SpaceX?
• Read: The funds that already invest in SpaceX
• Read: AI, space, quantum: how to invest in the future

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.