With SpaceX Ready to Be Included in the Russell 1000 Index, Should You Buy the Vanguard Russell 1000 Growth Index (VONG) ETF?

Space Exploration Technologies (NASDAQ: SPCX), popularly known as SpaceX, finally went public in a blockbuster initial public offering (IPO) that exceeded its targets and raised about $86 billion. That's one for the books, and it's not likely to be surpassed any time soon.

There are some fierce opinions about the stock on all sides. Proponents will talk about how Elon Musk keeps changing the world and how the company offers incredible, literally other-worldly opportunities. Naysayers will point to the massive net loss and high valuation.

Retail investors can make their own decisions about whether to buy the stock, but it becomes a murkier discussion when you include funds that plan to buy it. FTSE Russell, which owns the Russell brand and its indexes, has changed its rules to fast-track the inclusion of SpaceX stock. That means exchange-traded funds (ETFs) that track it will be compelled to buy the stock when it is added to the index after the market close on June 26, according to recently published reports.

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High-performance ETFs naturally feature growth stocks

The Vanguard Russell 1000 Growth ETF (NASDAQ: VONG) is one of Vanguard's best performers. It tracks the Russell 1000 Growth Index and features 387 of its top growth components. It's heavily weighted toward the largest stocks, and Nvidia itself accounts for 13% of the total, while the top five components represent nearly 45% of the total.

On the one hand, that has led to fantastic results for the ETF, as these stocks have soared. VONG has delivered an annualized gain of 17.14% since inception in 2010, right behind the top performer, the Vanguard S&P 500 Growth ETF, which has gained 17.21%. (That's outside of one of its newest ETFs that was created in September.)

The variety and diversification of the remaining stocks provide it with protection in challenging environments, which is why it has been able to maintain strong growth over a 16-year span. While it's not near the top of this year's ETFs, in this strong bull market, it provides greater security than many of this year's top performers and wins overall.

On the other hand, there's risk associated with having so much of its weight apportioned to so few stocks. When the ETF was launched in 2010, Nvidia was barely on the map, even in the greater investing community. It's now the most valuable company in the world, and the only one with a market cap topping $5 trillion.

SpaceX is in its own league

That brings us to SpaceX. As soon as the stock enters the index, VONG will have to include it, and based on how its components are weighted, it's likely to account for more than 3% of the entire portfolio.

If you love SpaceX but are worried about owning it as an individual stock, this is a great way to get exposure. However, the same risks apply to owning it individually; the company is losing money, the stock is expensive, and the share price may drop fairly soon. It will still be far outweighed by the other components, but if it soars, it could increase as a portion and have a greater impact on results.

If you have reservations about the stock, you may want to choose a different ETF before June 26.

Jennifer Saibil has positions in Vanguard Admiral Funds-Vanguard S&P 500 Growth ETF and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Nvidia and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.