The SpaceX IPO Could Blow Up This Mega-Popular Investing Strategy
Written by Jeremy Bowman for The Motley Fool -> SpaceX is expected to join the S&P 500 and Nasdaq-100 shortly after its IPO. The company, which is unprofitable, breaks some of the traditional rules for S&P 500 inclusion. The change in admission standards could impact index fun
SpaceX is expected to join the S&P 500 and Nasdaq-100 shortly after its IPO.
The company, which is unprofitable, breaks some of the traditional rules for S&P 500 inclusion.
The change in admission standards could impact index fund performance.
Investing in index funds like the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the Stat e Street SPDR S&P 500 ETF (NYSEMKT: SPY) has proven to be one of the best strategies of all time.
These index funds give you exposure to the S&P 500 (SNPINDEX: ^GSPC) , or 500 of the top publicly traded American companies across a range of sectors as curated by S&P Global , making them an easy way to get diversification and growth. The S&P has long had strict criteria for its membership to ensure that the index only contains the most qualified companies.
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Those rules, along with regular rotations to refresh the index, have helped ensure the continued success and strong performance of the S&P 500 , which has historically returned 9%, beating nearly every other major asset class.
Now, the S&P 500 is set to throw those standards out the window. SpaceX Founder and CEO Elon Musk asked the indexes to include his space exploration company as a criterion for going public, and they have complied. Additionally, the Nasdaq- 100 will "fast-track" SpaceX to be included in its index, meaning the popular Invesco QQQ Trust (NASDAQ: QQQ) will also hold the stock sooner than it normally would.
