VTI vs. VOO: Which Vanguard ETF Will Buy More SpaceX Stock After Its IPO?
Written by Daniel Foelber for The Motley Fool -> S&P Dow Jones Indices just updated its policy on fast-tracking the addition of megacap stocks to the S&P 500. SpaceX won't be added to the S&P 500 f…
S&P Dow Jones Indices just updated its policy on fast-tracking the addition of megacap stocks to the S&P 500. The Vanguard S&P 500 ETF is more concen
Read Full Story at Nasdaq News →Why This Matters
The recent update to S&P Dow Jones Indices' policy on megacap stock inclusion isn't just a technical adjustment—it sets the stage for how major index funds like Vanguard's VTI and VOO might respond to high-profile IPOs. For investors tracking these funds, the stakes are high, as the decision could reshape portfolio allocations overnight and signal broader shifts in market capitalization benchmarks.
Background Context
SpaceX’s exclusion from the S&P 500, despite its status as a private company, reflects the index’s conservative approach to liquidity and public float requirements. The policy change now allows faster inclusion of stocks like SpaceX once it goes public, provided it meets size thresholds. Historically, the S&P 500 has been slow to add new entrants, often waiting years, which has driven some investors to favor broader index funds like VTI that track the entire U.S. stock market.
What Happens Next
If SpaceX’s IPO meets the revised S&P 500 criteria, expect a race between VTI and VOO to accumulate shares, with the latter likely taking the lead due to its direct focus on mega-cap stocks. However, the timing of inclusion remains uncertain, leaving investors to weigh whether to preemptively allocate capital to SpaceX or wait for index funds to adjust. Regulatory approval and liquidity conditions will be critical variables in the coming months.
Bigger Picture
This policy shift underscores a broader trend toward faster index inclusion for high-growth, liquid stocks, which could narrow the performance gap between the S&P 500 and broader markets like the Russell 3000. For fund managers, the challenge will be balancing the demands of passive investors with the risks of overweighting volatile new entrants, potentially reshaping long-term sector allocations in major indices.
