SpaceX, Elon Musk’s space-exploration company, went public last week in a record-breaking IPO. As a publicly traded company, SpaceX is eligible to be included in some benchmark stock market indexes if it meets certain criteria. Many funds commonly held in 401(k)s and other accounts track different indexes.

Index Inclusion

SpaceX could be included in indexes offered by Nasdaq, FTSE Russell, and CRSP after meeting specific requirements. However, S&P Dow Jones Indices said it wouldn’t follow suit for its benchmark index, meaning SpaceX won’t be eligible to be included in the popular S&P 500 for at least a year.

Despite the enormous headline numbers, SpaceX’s weighting in benchmark indexes like the Vanguard Total Market Index will start relatively small. The company went public with less than 5% of its shares immediately available, meaning its weight in indexes would be relatively small to begin with.

Investor Impact

Investors who hope to limit exposure to SpaceX are best off sticking to basic investing principles and ignoring the single-stock volatility, experts say. Broadly diversify, never worry about one company, own the entire market, and keep costs low.

There are also a number of new exchange-traded funds that are planning to launch to build on the hype around the SpaceX IPO. These could give more weight to SpaceX, but investors should be cautious of the ‘meme stock’ hype surrounding the company.

Original reporting: KEYT (Ventura/Santa Barbara) — read the source article.