If You Own an Index Fund, You Likely Already Own SpaceX. Here Is How Much.

Following the largest initial public offering (IPO) in history, Space Exploration Technologies (NASDAQ: SPCX) stock is starting to pop up in a variety of exchange-traded funds (ETFs). The number seems to increase by the day.

To be precise, the stock in Elon Musk's reusable rockets company is a constituent of 148 ETFs as of July 3. The stock is a top-15 holding in 35 of those funds. Market participants looking to leverage ETFs as proxies on SpaceX stock have plenty of options to consider. There are actively managed funds with the flexibility to feature large exposure to SpaceX. Likewise, there's a growing population of dedicated space ETFs holding the stock.

Investors may be surprised by which ETFs and index funds now hold SpaceX stock. Image source: Getty Images.

But unbeknownst to some market participants, SpaceX is popping up in some basic index funds. Let's look at why that's the case and which well-known index funds are already SpaceX holders.

Points of order

Due to the size of the SpaceX IPO, some index providers altered their inclusion rules, setting the stage for this stock to join select benchmarks in short order.

On that note, S&P Dow Jones Indices didn't follow suit, meaning that investors holding the Vanguard S&P 500 ETF (NYSEMKT: VOO) or another basic S&P 500 (SNPINDEX: ^GSPC) ETF or index fund won't see SpaceX on those funds' roster until June 2027 at the earliest.

Among the big-name ETFs and index funds that are now SpaceX holders are products tracking FTSE Russell indexes, such as the Russell 1000 Index. Following the annual Russell reconstitution, SpaceX is now a member of that index and thus included in popular ETFs such as the iShares Russell 1000 ETF (NYSEMKT: IWB) and the Vanguard Russell 1000 ETF (NASDAQ: VONE). Those ETFs have about $59 billion in combined assets under management.

The Vanguard Total Stock Market ETF (NYSEMKT: VTI), one of the largest ETFs trading in the U.S., also holds SpaceX because its underlying index, the CRSP US Total Market Index, added the stock on June 18. However, this fund and the aforementioned Russell 1000 trackers aren't "SpaceX ETFs." Because only a small percentage of SpaceX's shares (3% to 5%, by some estimates) are publicly traded, the stock doesn't command prominent positioning in these ETFs. The Russell 1000 ETFs allocate just 0.13% to SpaceX, while the Vanguard Total Stock Market ETF allocates less than 0.2% of invested funds to SpaceX.

MSCI indexes, too

MSCI is one of the world's largest providers of benchmarks used by passive funds, and it too fast-tracked SpaceX. So the stock is now part of well-known indexes such as the MSCI USA Index and the MSCI All Country World Index. Among U.S.-traded ETFs, the latter gauge is more prominent. For example, it's tracked by the $33 billion iShares MSCI ACWI ETF (NASDAQ: ACWI), but that ETF's SpaceX weight is just 0.08%.

Investors engaging with sector ETFs should note that MSCI is one of the dominant providers of benchmarks for those products. As such, SpaceX is already included in some sector ETFs tracking MSCI indexes. For example, the stock accounts for 2.2% of the $1.8 billion Fidelity MSCI Communication Services Index ETF (NYSEMKT: FCOM).

It's a trend to monitor because, as more of SpaceX's float is released, the stock could eventually command massive percentages of communication services ETFs tracking MSCI benchmarks.

Todd Shriber has positions in MSCI and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends MSCI and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.