Odaily reported, citing CNBC, that SpaceX’s expected inclusion in multiple mainstream index systems is drawing attention to the risk that passive investors may take on through index-tracking products. The key issue is that funds following those benchmarks would need to hold SpaceX shares once the company is added, meaning investors in passive products could gain exposure to the stock without making an active decision to buy it directly.
Index providers have adjusted rules for inclusion
According to the report, several index providers have already made rule adjustments that would allow SpaceX to be included in major indexes. The named providers include CRSP, Nasdaq, FTSE Russell and MSCI. This places the discussion beyond a single benchmark or a single fund product, because rule changes across several index systems can influence the portfolios of funds that use those indexes as their investment framework.
The analysis said SpaceX’s current implied volatility is close to 120%, about three times the level of Bitcoin-related ETFs, with IBIT cited as an example. On that basis, SpaceX would become one of the most volatile constituents in both the S&P 500 and the Nasdaq 100 if it enters those indexes. For passive funds, the addition of such a high-volatility component can alter the risk profile of the portfolio, particularly when the relevant fund is large or when the stock receives meaningful index exposure.
Large ETFs may passively absorb the exposure
Industry participants said that if large ETFs, including products such as the Vanguard Growth Index Fund, passively add SpaceX exposure, the overall volatility of the index could rise significantly. The controversy centers on whether passive investors would end up bearing the risk of a high-volatility asset simply because of index inclusion, rather than through an active investment choice.
The report also noted a different view: once SpaceX enters index systems, continued passive inflows and market-making mechanisms could reduce extreme volatility over the medium to long term and improve liquidity stability. In that framing, index inclusion would affect not only volatility, but also flows, trading depth and the structure of liquidity. The debate around SpaceX’s potential entry into mainstream indexes is therefore focused on how a high-volatility asset is absorbed by passive investment vehicles, and how that risk is reflected in index products.