SpaceX is about to become the biggest IPO in history.
The first instinct is to look at SPY. But the first ETF to scoop up SpaceX shares is probably Vanguard's total market fund - the one most investors call VTI.
SpaceX is targeting a Nasdaq listing on June 12 under the ticker SPCX. The deal could raise as much as $75 billion at a $1.75 trillion value.
That would more than double Saudi Aramco's $29 billion debut in 2019, which held the old record.
The IPO bundles three businesses into one:
Musk will keep 85.1% of the voting power. That comes from a dual-class share setup where Class B shares carry 10 votes each.
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The S&P 500 has strict entry rules. A firm has to turn a profit for the last four quarters and trade for 12 months on a big exchange.
Under those rules, SpaceX would not show up in SPY until 2027.
The CRSP US Total Market Index works differently. That is the index Vanguard's VTI tracks.
It normally requires 20 trading days of history. But it has a fast entry rule for big IPOs that lets them in after just five days.
That means SpaceX could land in your VTI portfolio within a week of the IPO.
Index inclusion isn't just symbolic. Passive funds tracking those indexes have to buy whatever gets added.
Vanguard's CRSP-tracking funds alone manage more than $3 trillion. That could mean $15 to $25 billion in SpaceX share buying once the firm qualifies.
QQQ is next in line. The Nasdaq 100 finalized its own fast entry rule on May 1.
Newly public mega-caps can now join in 15 trading days, which could drive another $8 to $12 billion in passive buying.
FTSE Russell is proposing the same shift, with S&P reportedly considering a similar move. The wave of mega-cap IPOs is the reason. OpenAI and Anthropic are also said to be lining up public listings.
The FTSE Russell plan would cut the IPO waiting period to five trading days and waive the standard four-quarter profit test. The consultation runs through May 28, with the new rule expected to take effect by June 8 if approved - four days before the SpaceX IPO. The timing is not a coincidence.
For investors who already own a broad market ETF, the SpaceX IPO won't require any move. The exposure shows up on its own.
The question is just how fast, and how much of the float passive funds end up holding once the rules align.
Index providers are rewriting the rules to keep up. The biggest IPO in history is the reason.
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