SpaceX will be added to the tech-heavy Nasdaq 100 index on July 7, exchange operator Nasdaq confirmed on Friday.
The inclusion in the index is expected to pave the way for a surge in passive investments into Elon Musk’s rocket and AI giant, as many mutual funds and exchange-traded funds (ETFs) automatically buy shares of companies that are added to the index. The move is likely to increase demand for the stock again and can push the price higher.
Popular funds such as Invesco’s QQQ and QQQM, which track the Nasdaq 100, will purchase SpaceX shares to match the index, potentially bringing billions of dollars in fresh investment into the company.
J.P. Morgan estimated that SpaceX’s inclusion in the Nasdaq 100 could draw $4.3 billion in passive inflows.
“Clearly, there’s a lot of demand, that’s why they fast-tracked the integration into the index,” Michael Field, chief equity market strategist at Morningstar, told Reuters. “A lot of people will be happy with it. Some fund managers less so, the skeptics amongst them, us included. We think the stock is overvalued.”
What it means for Indian investors?
Indian retail investors cannot directly buy SpaceX shares but they can paasively invest in the stock through mutual funds that track the Nasdaq-100 index.
Once SpaceX joins the Nasdaq-100 on July 7, these index funds will automatically include the company’s stock in their portfolios. Following which, investors in Nasdaq-100 index funds will own a small stake in SpaceX, alongside some of the world’s largest technology companies – such as Apple, Microsoft, Nvidia, Amazon, Alphabet and Meta.
Here are six Indian mutual fund schemes that track the Nasdaq 100 TRI:
Aditya Birla Sun Life US Equity Passive FOF: Annualised return of 20.89% since launch.
Axis NASDAQ 100 US Specific Equity Passive FOF: Annualised return of 36.77% since launch.
Invesco India – Invesco EQQQ NASDAQ-100 ETF FOF: Annualised return of 27.53% since launch.
Kotak US Specific Equity Passive FOF: Annualised return of 22.51% since launch.
Motilal Oswal Nasdaq 100 FOF: Annualised return of 30.07% since launch.
Navi Nasdaq100 US Specific Equity Passive FOF: Annualised return of 25.52% since launch.
What will SpaceX’s weightage be in the Nasdaq-100 after its inclusion?
As per reports, SpaceX will carry a weight of around 0.53% to 0.6% in the index. While this gives the company a place in the benchmark index, its weighting is insignificant compared to big tech companies. For example, Nvidia accounts for about 12% of the Nasdaq-100, while Apple makes up roughly 11%.
SpaceX, which made its Nasdaq debut on June 12, has swung between sharp losses and small profits over the past three years. Last year, the company reported a net loss of $4.9 billion.