SpaceX, Elon Musk's aerospace company, is being added to prominent stock indexes like the Nasdaq 100, FTSE Russell, and MSCI Inc. This rapid inclusion, facilitated by revised methodologies, is expected to generate billions of dollars in mechanical buying from index-tracking funds, with estimates ranging from $4.3 billion to $5.4 billion. Despite this, the company's weighting in most indexes will initially be less than 1% due to its relatively small public float.
However, a growing number of investors are actively seeking to avoid exposure to SpaceX and other Musk-controlled companies like Tesla. Individuals like Christopher Bejnar have moved substantial portions of their portfolios, sometimes tens of thousands of dollars, into European index funds or rival companies like Rocket Lab Corp. These investors cite concerns over Musk's "inflammatory political activism," the financial and regulatory risks associated with his companies, and what they perceive as unsustainable debt financing at SpaceX.
Financial advisors are fielding numerous questions from clients who want to divest from Musk's ventures. Some, like Emily Green, head of wealth management at Ellevest, suggest direct indexing as a solution, allowing investors to exclude specific stocks from their portfolios while still mirroring an index's overall performance. Others, like financial advisor Omar Qureshi, highlight the broader implications of the passive investing boom, where index inclusion can create a "self-fulfilling prophecy" of inflows driving stock performance for large companies. The sentiment among these anti-Musk investors is strong, with many stating they would "not feel bad about never buying SpaceX, no matter how well it does."
