SpaceX Joins the Nasdaq-100 on July 7. What It Means for Index Fund Investors
Yahoo Finance ·
On June 12, SpaceX ( SPCX +4.15% ) completed the largest initial public offering (IPO) in history, raising about $85.7 billion after underwriters exercised their overallotment option. Less than a month later, the company is about to become something more than just a hot new stock, but also one that millions of people will own indirectly without ever choosing to buy it. Before the market opens on July 7, the company will join the Nasdaq-100, the index that sits behind the Invesco QQQ Trust ( QQQ +1.76% ) and a long list of 401(k) and retirement-plan funds. More than $800 billion is benchmarked to that index, and all of it now has to make room for Elon Musk's rocket company. Here's what that actually means if you hold a Nasdaq-100 fund. An index fund doesn't pick stocks. It holds whatever its index holds, in the same proportions, and leaves the judgment calls to the rulebook. So when the Nasdaq-100 adds SpaceX , every fund tracking it has to buy the stock -- not because a manager decided it was a bargain, but because the index says so.
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