Not a law, that’s just how index funds work. It’s meant to be an un-managed investment fund that tracks some aspect of the market via predefined rules. The S&P500 for instance tracks the top 500 companies by market capitalization (among a bunch of other weird rules), and it does so by purchasing shares in these companies proportionately. So new company appears that meets the criteria -> purchase. The big part of the story here is the fact that all of these index funds changed their rules to include spacex, especially when spacex’s finances look terrible.
s&p is one of the few that didn’t change their rules. if you buy an etf of a different index, they are legally required to purchase the same equities in the index, or that would be fraud.
from the article you linked:
The S&P 500 index committee decided to not shorten its standard 12-month period before adding newly public companies, in contrast to the decisions from the Nasdaq and Russell indexes about the mega-cap stock.
Many new SpaceX leveraged ETFs are debuting tomorrow so investors can hold the stock as an ETF with varying degrees of risk.
Unlike the S&P, index committees for the Nasdaq and Russell market benchmarks said they would update their rules. In the simplest terms, here’s what that means for core U.S. market index fund investors.
“If you want SpaceX, you’re not buying the S&P 500. You’re going to buy the NASDAQ 100 or the Russell 1000,” said Strategas Securities chief ETF strategist Todd Sohn on this week’s “ETF Edge.”
Wym index funds are required to buy the largest companies? What law is this?
Not a law, that’s just how index funds work. It’s meant to be an un-managed investment fund that tracks some aspect of the market via predefined rules. The S&P500 for instance tracks the top 500 companies by market capitalization (among a bunch of other weird rules), and it does so by purchasing shares in these companies proportionately. So new company appears that meets the criteria -> purchase. The big part of the story here is the fact that all of these index funds changed their rules to include spacex, especially when spacex’s finances look terrible.
I highly doubt that this is true. Do you have a reputable source for this?
wall street journal
FTSE Russell Latest to Make U.S. Index Inclusion Easier ahead of SpaceX IPO | May 27, 2026 (archive.ph)
fortune
You can ignore AI giants like SpaceX, but your 401(k) won’t | June 13, 2026 (archive.ph)
u.s. senate committe on banking
Warren Presses Index Providers on Rule Changes to Rush SpaceX Shares Into Americans’ Retirement Accounts | June 11, 2026 (senate.gov)
nyc comptroller
Letter to the London Stock Exchange Group and FTSE Russell Re: SpaceX | June 11, 2026 (nyc.gov)
It says index inclusion not ETF inclusion. So, if you buy an ETF of the S&P 500 you‘re good since there SpaceX is not listed.
https://www.cnbc.com/2026/06/12/spacex-ipo-sp-500-index-funds-investors.html
s&p is one of the few that didn’t change their rules. if you buy an etf of a different index, they are legally required to purchase the same equities in the index, or that would be fraud.
from the article you linked: