Daniel Foelber, The Motley Fool
4 min read
Investment management firm Vanguard recently updated the holdings of many of its index funds and exchange-traded funds (ETFs).
The second-largest ETF by net assets, the Vanguard Total Stock Market ETF (NYSEMKT: VTI), holds 18,738,438 shares of Space Exploration Technologies (NASDAQ: SPCX) — worth $3.2 billion as of June 30. That’s 3.4% of the 555 million shares that SpaceX sold for $135 from its initial public offering (IPO). Granted, SpaceX also raised another $10.7 billion from underwriters that exercised options to buy shares. But the key takeaway is the speed and size at which the ETF gobbled up SpaceX stock.
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Here’s what investors need to know about SpaceX’s impact on well-known low-cost ETFs, and ways they can position their portfolio to get exposure to SpaceX or avoid it entirely.
ETFs are buying SpaceX stock at a rapid rate
The Vanguard Total Stock Market ETF was aggressively buying a good chunk of SpaceX’s float in June at a price far higher than the price at the time of this writing of $118.24 per share. In contrast, Vanguard’s largest ETF by net assets, the Vanguard S&P 500 ETF, won’t begin buying SpaceX until it is added to the S&P 500, which will be June 2027 at the earliest.
The value of the Vanguard Total Stock Market ETF’s SpaceX position is roughly equal to the combined value of the eight other Vanguard ETFs that bought SpaceX in June.
The Vanguard Total Stock Market ETF is so large that even a $3.2 billion position represents just 0.14% of the fund. And there are 109 stocks with higher weights in the ETF than SpaceX.
Other Vanguard ETFs have a higher percentage weighting in SpaceX than the Vanguard Total Stock Market ETF. SpaceX already makes up 2.4% of the Vanguard Communication Services ETF (NYSEMKT: VOX) — a sector ETF that invests in communication services stocks like Alphabet, Meta Platforms, and Netflix.
Because the sector ETF is more focused, it will hold a larger position in SpaceX than a broad-based fund like the Vanguard Total Stock Market ETF, which aims to own the entire U.S. stock market. Similarly, growth-focused ETFs like the Vanguard Growth ETF and Vanguard Mega Cap Growth ETF will own more SpaceX than the Vanguard Total Stock Market ETF.
Aligning ETF holdings with your interest in IPOs
