Not in the mood for Musk? These funds cut him out of the index
Elon Musk excludes Tesla and SpaceX from xAI. Sec rules determine when investors can invest in the AI company.
Investors who do not want exposure to Elon Musk companies may soon get a new alternative. The US asset manager Subversive ETFs has applied for two listed funds (ETFs) that deliberately exclude companies from the billionaire. In this way, the asset manager responds to the growing demand for investment products that certain companies avoid.
The proposed funds largely follow the Nasdaq 100 and the S&P 500, but disregard companies established, led or closely affiliated with Elon Musk.
The two ETFs, with the tickers QQNE and SPNE, currently exclude two companies: Tesla and SpaceX. According to the application, these are companies founded, managed or controlled by Musk.
At least 80 percent of the capital remains invested according to the composition of the underlying index. The weight of the excluded companies is then distributed among the other companies based on their market capitalization.
Subversive ETFs also want to retain the ability to exclude other Musk-listed companies in the future, such as Neuralink and The Boring Company, as soon as they are listed.
According to the fund manager, some investors deliberately do not want exposure to Musk companies. This may be due to his political views, but also because they find the valuation of his companies too high.
The launch follows shortly after SpaceX was included in the Nasdaq 100. As a result, many investors who invest through index funds automatically also got exposure to the space company.
The S&P 500 Ex Elon ETF is expected to exclude only Tesla at launch. SpaceX is not yet part of the S&P 500. A company can only be listed after it has been listed for twelve months. The share is now included in the Nasdaq 100.
Subversive ETFs previously launched the NANC and GOP ETFs. They track the stock trades of Democratic and Republican members of the U.S. Congress, respectively.
The launch of the new ‘ex Elon’funds is provisionally scheduled for 21 September. The application is still under review by the US stock market watchdog SEC. Details, such as the management fee, may therefore change before the ETFs actually appear on the market.