The “Eliminate Musk” ETF is coming! will you buy it

The “Eliminate Musk” ETF is coming! will you buy it.

In addition to longing and shorting Musk's companies, a new trading method has emerged on Wall Street: "eliminating Musk." The latest documents disclosed by the U.S.

Securities and Exchange Commission (SEC) show that emerging ETF issuer Subversive ETFs applied to launch two funds to track the Nasdaq 100 Index and the S&P 500 Index respectively, but actively eliminated companies founded, controlled, led by or closely related to Musk.

The application was submitted on July 8, local time, and is expected to take effect 75 days after the application is submitted. The two funds mentioned above are named Nasdaq-100 Ex-Elon Enterprises ETF (QQNE) and S&P 500 Ex-Elon Enterprises ETF (SPNE).

As of press time, information such as the management rates and listing exchanges of the two funds are still to be determined. However, "Would you buy an ETF that specifically 'removes Musk'?" This topic has sparked heated discussions on social platforms.

According to the application documents, QQNE will invest primarily in Nasdaq 100 Index constituent stocks, but exclude so-called "Musk-related companies." Fund managers will use active judgment to identify companies founded, controlled or led by Musk, as well as businesses in which Musk serves as founder, CEO or controlling shareholder.

Currently, companies explicitly excluded from QQNE include Tesla and SpaceX. After excluding the above-mentioned companies, the index weights originally belonging to Tesla and SpaceX will be redistributed to the remaining constituent stocks in proportion to their market capitalization.

At least 80% of the fund's net assets will be allocated to other companies in the Nasdaq 100 Index, and related exposure may also be obtained through instruments such as ETFs, options or swap agreements. SPNE operates in a similar manner, primarily referencing the S&P 500 Index.

Currently, only Tesla among Musk's companies is a component of the S&P 500 Index, so SPNE mainly excludes Tesla at this stage. SpaceX has not yet entered the S&P 500 index, but the application documents clearly state that if it is included in the future, it will also be excluded from the fund's investment scope.

It is worth noting that these two products are not passive index ETFs in the strict sense, but actively managed ETFs. Fund managers need to continuously determine which companies are "Musk-related companies" and adjust their investment portfolios accordingly.

Subversive stated in its application documents that some investors may be concerned about the corporate governance, political risks and high stock price volatility of Musk-related companies, and therefore want to gain exposure to U.S. large-cap stocks while avoiding related companies.

However, fund documents also suggest that due to the active exclusion of Musk's companies, the two funds may underperform the Nasdaq 100 Index, the S&P 500 Index and other funds that do not set similar restrictions. This is not the first time Subversive has launched an ETF with controversial topic attributes.

The company has previously partnered with data platform Unusual Whales to launch a product tracking stock trades by U.S. members of Congress and their spouses. Among them, NANC mainly refers to the positions held by Democratic congressmen, while the GOP mainly refers to the positions held by Republican congressmen.

SpaceX stock price fluctuates after listing SpaceX was listed on Nasdaq on June 12. Starting from July 7, local time, SpaceX was included in the Nasdaq 100 Index, which covers about 100 of the largest non-financial companies listed on Nasdaq.

This means that as SpaceX enters the Nasdaq 100 index, investors who buy the ordinary Nasdaq ETF will also passively gain SpaceX exposure. It is worth noting that SpaceX’s stock price performance after its listing was not stable. Since its listing, the company's stock price once rose to above $225, but has since fallen back.

On July 10, local time, SpaceX’s share price fell to an intraday low of $145.07 per share and closed at $145.3 per share, a new low since its listing. As SpaceX's stock price retreats, Wall Street's divisions over the company are widening.

Although the above-mentioned two ETFs announced in a high-profile manner that they would eliminate Musk's companies, ARK Invest, owned by "Sister Wood" Cathy Wood, chose to buck the trend and buy SpaceX at the bottom.

Trading data released by ARK shows that on July 8, Wood’s four active ETFs, ARKK, ARKQ, ARKW and ARKX, bought a total of 181,847 SpaceX shares. Based on the average price of that day of US$148.61, the purchase amount was approximately US$27.02 million.

Among them, ARKK bought 112,046 shares, ARKQ bought 35,124 shares, ARKW bought 28,763 shares, and ARKX bought 5,914 shares. Wall Street starts trading on 'Musk sentiment' For these two funds, market evaluation is somewhat divided.

Critics believe that actively excluding Tesla and SpaceX may cause the fund to significantly underperform the benchmark index when the stock prices of related companies rise, and further widen the return gap with the Nasdaq 100 Index and the S&P 500 Index.

Some investors regard these two ETFs as "emotional trading" and believe that such products rely too much on topic popularity and that the investment logic is based more on Musk's personal attitude rather than the company's fundamentals.

Supporters believe that not all investors are willing to bear the risks posed by Musk-related companies in terms of corporate governance, political controversies and stock price fluctuations. For investors who want to allocate to the U.S. stock market but are unwilling to hold Tesla or SpaceX, this type of product provides a more direct option.

In addition, some netizens believe that this is also a reflection of the continuous segmentation of ETF products. As long as there is a sufficiently clear investment preference in the market, Wall Street may package it into a financial product that can be traded. (

#Stocks #Tesla #Nasdaq #SP500