The Wall Street Journal reported that index providers are revamping their inclusion rules for the largest initial public offerings, a shift that analysts and academics warn could force index funds to buy massive quantities of newly listed stock at elevated prices. The moves come as SpaceX, Anthropic, and OpenAI prepare to go public in what could be a series of record-breaking offerings.
SpaceX is expected to launch a stock offering later this month that could raise roughly $80 billion, with the company reportedly targeting a total valuation of at least $1.5 trillion. Anthropic filed for an IPO earlier this week, and investors are valuing the AI company at nearly $1 trillion. OpenAI is expected to follow, the Journal reported.
To accommodate the flow of large IPOs, index providers — firms that compile market averages such as the S&P 500, Nasdaq 100 and Russell 1000 — are adopting changes that will fast-track the inclusion of mega-cap offerings. A new provision at Nasdaq will inflate SpaceX’s weighting in the Nasdaq 100 index, effectively forcing some index funds to triple their purchases of the stock. Several index providers are also implementing “fast track” policies that add giant IPOs to major benchmarks after as few as five trading days, bypassing the standard “seasoning period” of up to one year. The Journal noted that smaller companies may not qualify for these expedited procedures.
“These developments are worthy of the scrutiny of policymakers and regulators,” Sandip Bhagat, chief investment officer at Whittier Trust, who formerly helped oversee Vanguard’s stock funds, told the Journal. “Somebody should be looking at these practices and making sure they’re in the best interest of the investing public at large.”
David Booth, chairman of Dimensional Fund Advisors and a pioneer in index-fund development, said the changes could produce “a huge shift in demand for no reason other than the stock has been included in the index.”
Steven Schoenfeld, CEO of MarketVector Indexes, compared the fast-track changes to a designated driver at a party suddenly serving hard liquor. “A broad-based index fund is supposed to be the designated driver at the investment party,” he told the Journal. “But now what some index providers are saying is, ‘I think you need a Cuba libre with a double shot of rum.’”
A 2025 study by Harvard finance researchers Marco Sammon and Chris Murray examined the CRSP stock indexes, which serve as the basis for several large index funds. Since 2017, CRSP has been adding IPOs to its indexes after the fifth day of trading. The study found that these IPOs outperformed by 15% in their first five trading days, as hedge funds and other speculators drove up the price knowing that index funds would be forced to buy from them on the sixth day.
Hanno Lustig, a finance professor at Stanford, said that if “loading up on mega IPOs at too high a price becomes a new model for index funds,” the extra cost “could become almost the equivalent of an annual fee charged to investors.” He said the cost would not be enormous but would make index funds less of a bargain.
Despite the large offerings, the impact on index-fund composition appears modest in the near term. Even after the IPO, about 85% of SpaceX shares would remain in private hands, including roughly 85% held by Elon Musk. If included in the S&P 500, SpaceX would rank roughly 130th in size, about where Comcast sits, according to Strategas Securities. Assuming standard index inclusion, SpaceX’s initial weight in the S&P 500 would be approximately 0.14%, with Anthropic and OpenAI likely even smaller.
“Even after an IPO, nearly all of SpaceX would remain in private hands,” the Journal reported. “There’s no way that’s enough to morph index funds beyond recognition or to turn them into a bad deal. Even so, this is a slippery slope.”