SpaceX just completed the largest IPO in history, and investors who own Vanguard Group index funds are along for the ride.
The Malvern investment giant’s massive passive index funds and exchange-traded funds are expected to automatically begin purchasing shares of Elon Musk’s aerospace company as SpaceX is added to major market indexes, reports Jeff Blumenthal for the Philadelphia Business Journal.
SpaceX raised $75 billion at $135 a share, with the stock surging 19 percent on its first day of trading.
The first Vanguard fund in line for exposure is the Vanguard Total Stock Market ETF (VTI), which tracks the CRSP US Total Market Index and uses a rule that adds massive IPOs five days after they go public.
Other funds, including the widely held S&P 500 ETF (VOO), have a 12-month waiting period before newly public companies can be added.
Jeff DeMaso, editor of the Independent Vanguard Adviser, pushed back on any notion that Vanguard is making a bold call on SpaceX.
“Vanguard isn’t making an active bet on SpaceX or OpenAI any more than it was making a bet on bitcoin when it bought shares of [analytics software vendor] Strategy a year ago,” said DeMaso. “It’s simply following the indexes — buying the haystack, as it always does.”
Vanguard urged investors to approach the SpaceX IPO with caution, reminding them that investing directly in IPOs is very speculative.
The company emphasized that index rules will govern how and when SpaceX enters its funds, and that one of the core principles of indexing is allowing markets, not headlines, to determine outcomes.
Learn more about how Vanguard’s funds will gain exposure to SpaceX and what it means for investors at the Philadelphia Business Journal.
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