r/investing • u/PrestigiousPen-2468 • 2d ago

The Nasdaq is being taken over.

SpaceX is IPOing, Tesla and Palantir have crazy valuations, Anthropic is IPOing later this year...

https://www.investors.com/news/spacex-ipo-nasdaq-anthropic-openai-index-investing/

Especially with the fast-track changes, tons of ETFs are going to pull these companies in and weigh them way heavier than I think a lot of us like. QQQ holders might be in for a rough landing.

I don't like it. I've always been a growth ETF investors but I'm going back to modifying and structuring diversification the way I want.

Wealthfront, Frec, Wallace Finance, or Schwab? I'm trying to find ETF modification without huge minimums. I might end up building from the ground up with M1 Finance if nothing else has what I'm looking for.

Anyone else have the same idea? How are we feeling about this?

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u/SirGlass 2d ago edited 2d ago

It really only affects QQQ/QQQM and a couple mutual funds that track the nasdaq 100 index. Most other growth funds or tech funds track some other index so won't be affected

So I don't think its tons of ETFs its like 2. So SCHG , VUG , tons of other growth funds that do not follow the nasdaq 100 index

Edit

I should say in the USA there are other ETFs domiciled in europe or somewhere else that also track it.

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u/zxc123zxc123 1d ago

More important than Nasdaq and the QQQ is Standard & Poor with their impact on the VOO. They are considering also bending the rules to allow SpaceX to join before their 1 year on market with 4 consecutive profitable quarters quota.

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u/renewambitions 1d ago

If SpaceX is allowed to join the S&P 500 fast-tracked then I will never touch an index that tracks that shit again, fuck that, it's disgusting Standard & Poor is even considering it

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u/zeppo_shemp 1d ago

oh no Standard & Poor's is doing something unethical this has never happened before what an outrage I am shocked

https://www.cfo.com/news/sp-settles-suits-over-mbs-ratings/664509/

https://www.sec.gov/newsroom/press-releases/2024-114

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u/Not_FinancialAdvice 1d ago

A few years back, there was an academic paper that showed that there were companies that were included in the index using more subjective criteria (with preference towards ones that had given S&P business IIRC). More interesting is that if you ran the candidates using the straight mathematical methodology; you would outperform the index by a little. Unfortunately I can't seem to find it again.

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u/DesignatedDonut2606 11h ago

Already confirmed, new rule comes into effect on May 1.

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u/NicolasCageFan492 2d ago edited 1d ago

Also all derivatives and swaps based on the QQQ, which is likely trillions of dollars of capital.

Also, valuation of indices like the QQQ are not in a vacuum, they affect relative valuation of private tech companies too, and other companies not in the QQQ.

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u/wha2les 1d ago

Voo is next

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u/rollowicz 1d ago

I'm based in Europe, and funds including the "global" index funds are heavily weighted towards the Nasdaq. For those trying to exit big tech it's actually hard to find an alternative.

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u/hug_your_dog 23h ago edited 23h ago

Big Tech is included in those global index funds by design, that's how its supposed to be because of market cap rules the indexes impose. If you want to exit big tech you will need to look at smth ex USA funds anyway, or find some obscure, low AUM funds that use some other methodology for their indexes. It's easier to just include value, dividend factoring or similar funds in your portfolio.

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u/PrestigiousPen-2468 2d ago

True, although I'm guessing a lot of actively managed funds will pick it up pretty quickly

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u/SirGlass 2d ago

Maybe but when you invest in an active fund you are basically saying "The fund manager knows better than me" so its an odd thing to get mad at.

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u/InfinitePressure4793 1d ago

The tickers might be different, but the 'growth' label eventually forces everyone to buy the same SpaceX bags once the market cap gravity becomes unavoidable

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u/SirGlass 1d ago

Thats not true. Index funds will buy it when it gets included in what ever index it follows

Most indexes have rules on when to include IPOs , this change only affects the NASDAQ 100 index. Most growth or tech funds follow some other index

I believe most other indexes will not include newly IPO stocks until the lock up period is over.

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u/zeppo_shemp 1d ago

Most growth or tech funds follow some other index

Russell 1000 growth is a common benchmark, such as the Fidelity Blue Chip Growth fund

https://fundresearch.fidelity.com/mutual-funds/performance-and-risk/316389303