Wall Street’s new strategy: Eliminate Musk
Wall Street is turning "eliminating Musk" into a trading strategy. As SpaceX entered the index at a record speed, triggering a large-scale allocation of passive funds to the stock, a Wall Street issuer submitted an application to the regulator to launch two ETFs tracking the Nasdaq 100 and the S&P 500 respectively, but explicitly excluded all companies founded, controlled or led by Musk.
Wall Street is turning "eliminating Musk" into a trading strategy. As SpaceX entered the index at a record speed, triggering a large-scale allocation of passive funds to the stock, a Wall Street issuer submitted an application to the regulator to launch two ETFs tracking the Nasdaq 100 and the S&P 500 respectively, but explicitly excluded all companies founded, controlled or led by Musk. "Eliminate Musk" ETF launched An emerging issuer called Subversive ETFs recently submitted an application to the regulatory agency to launch two innovative passive investment products, with the codes QQNE and SPNE. The two products will track the Nasdaq 100 and S&P 500 respectively, but will systematically exclude all companies founded, controlled or led by Elon Musk. The launch of this application is directly related to SpaceX’s recent record-breaking “flash index”. From its listing on June 12 to its inclusion in the Nasdaq 100 Index, it took SpaceX only 15 trading days, setting a record for the fastest inclusion since the index was founded. In March this year, Nasdaq adjusted its index rules - allowing the top 40 super-large new stocks by market capitalization to apply for inclusion after 15 trading days of listing, replacing the previous waiting period of at least 3 months. The market generally believes that this rule is "tailor-made" to a large extent for SpaceX. The scale of passive buying brought about by the index is staggering. JPMorgan Chase’s calculations show that the Nasdaq 100 alone will attract about US$4.3 billion in passive funds to buy SpaceX; if the simultaneous inclusion effect of MSCI and FTSE Russell global index systems is included, the total scale of global passive fund purchases can reach about US$35 billion. Skeptics believe that this forces millions of index tracking investors to allocate some of the highest market valuation targets before the normal price discovery mechanism is fully operational. Marketing gimmick or investment logic? It is worth mentioning that Wall Street asset management giants have intensively launched ETF products that are deeply tied to assets such as Tesla and SpaceX. Among them, Direxion launched a 2x daily long Tesla ETF; Defiance launched a 2x daily long SpaceX ETF; Battleshares launched a long-short paired trading ETF that is long Tesla and short Ford. The excluded products submitted by Subversive ETFs this time complement the demand at the other end of the market and serve investment groups who intend to reduce the risk exposure of Musk-related assets. Industry insiders generally gave cautious evaluations of the newly declared "Musk-free" themed ETF, believing that the product's marketing attributes are greater than its actual investment value. Dave Nadig, president and research director of ETF.com, believes that building fund products around too specific investment views often makes it difficult to form a stable and lasting investor group. When commenting on the application for the "Musk-removing" series of ETFs, he said that such products may attract some funds that lack in-depth consideration, but they are essentially micro-themed design ideas and are difficult to truly meet the actual needs of any specific investor. This is more of a marketing gimmick than solid investment logic. "I understand why issuers feel the need to devise new ways to stand out. But investors should still be wary because such products may not serve a legitimate investment purpose or may come at a high price for negligible returns," said Morningstar's Jeffrey Ptak. Nate Geraci, president of NovaDius Wealth Management, said that if the industry has developed to the point where a single company is removed from mainstream indexes based solely on investor sentiment towards a certain individual, product segmentation may have been excessive. (