We have previously advised investors to exercise caution around mega-IPOs. The structure of IPO access, the valuations involved, and the historical record of large offerings all point toward patience rather than urgently and actively trying to purchase into these stocks.
Long-term diversified investors who take no action will nevertheless assume positions in the companies that are offering these mega-IPOs as the companies are added to the major investment indexes. After SpaceX is added to the S&P 500, for example, investors in S&P 500 index funds will automatically assume a stake in the company.
Several index providers have announced changes to their criteria for adding new stocks because of this year’s mega-IPOs. In this piece, we take stock of how we expect this to play out for investors in major indexes.
How IPOs work in practice
When companies have their initial public offerings (IPOs), it marks their debut as a publicly traded stock. SpaceX, Anthropic, and OpenAI are potential candidates to be three of the largest IPOs in history — with valuations into the trillions.
Investors should keep in mind that a company’s valuation is not the same as the amount of shares immediately issued to the market. Goldman Sachs recently estimated new stock issuance at roughly $225 billion this year — far smaller than the combined multi-trillion-dollar valuations of these three firms.1 Still, by any measure, they could ultimately join the ranks of the largest public companies in the U.S. and which may lead to natural inclusion in the major market indexes.
How do IPOs get added to market indexes?
Given the scale of these offerings, several index providers have announced changes to their inclusion methodologies to incorporate these companies sooner than they would have historically. Nasdaq, FTSE Russell, MSCI, and CRSP have all created fast-entry lanes. FTSE and MSCI set a historical precedent for this when they fast-tracked Saudi Aramco following its 2019 IPO.
Notably, not all index providers are following suit. The S&P 500 is not changing its methodology.
Below is a comparison of how three major indexes (S&P 500, Russell 1000, Nasdaq-100) are expected to incorporate SpaceX.
Two items are worth highlighting. First, the Russell 1000 is poised to add SpaceX very quickly, as soon as five trading days post-IPO, while the Nasdaq-100 could add SpaceX after 15 trading days. The S&P 500, which did not adopt a fast-track approach, will likely not include SpaceX until mid-2027 at the earliest.
Second, SpaceX’s weighting in any index may be modest relative to what investors might expect given its multi-trillion-dollar valuation. Both the S&P 500 and the Russell 1000 weight companies by the amount of stock floated in the market, not total market capitalization. As a result, SpaceX’s initial weighting in either index is likely to be approximately 0.1%, though this will depend on how SpaceX and other index constituents perform over time.
Is it good or worrying that some indexes are fast-tracking mega-IPOs?
Some considerations:
Pros
- Benchmarks are designed to represent the largest public companies. Waiting the customary period (a year or more) to include these mega-IPOs would leave a meaningful gap in that coverage.
- The different approach that the index providers have taken may be a benefit. Staggered inclusion timing spreads out the period during which major index funds must purchase the stock, rather than concentrating that buying into a single moment.
Cons
- Many mega-IPOs have historically debuted at elevated prices before going through a trough period (even for companies that have ultimately proved successful). Early buying by index funds could mean purchasing at stretched valuations.
- Bloomberg estimates that Russell and Nasdaq funds will need to purchase roughly 25% of SpaceX’s IPO shares, a substantial position to absorb quickly.2
- That figure could have reached 50% of free-float shares had the S&P 500 also adjusted its methodology.3
Are these IPOs large enough to disrupt the stock market?
Despite the historic scale of these IPOs, these companies represent more of a ripple than a tidal wave in the context of the global stock market. SpaceX’s $75 billion float would constitute roughly 0.1% of the Russell 1000’s total market capitalization. Over time, that weight will increase as lockup periods expire and more shares become freely tradable.
Stepping back further: Goldman Sachs estimates approximately $700 billion in total U.S. IPO issuance across more than 100 companies in 2026. That figure is large in absolute terms, but gross share buybacks (which return capital to investors) are expected to exceed $1 trillion this year. In other words, capital returned to stock market investors in 2026 could potentially offset some of the new issuance hitting the market.
Takeaways for long-term investors
Our advice to long-term investors remains largely unchanged:
- Stay diversified. Our evidence-based approach continues to support broad diversification across as many companies as possible, which helps reduce the impact of any single company on portfolio outcomes.
- Avoid market timing and stock picking. In moments of excitement, it is tempting to believe that tomorrow’s winners are obvious today. Acting on that belief is emotion-driven, and this form of FOMO-induced market timing and stock selection has not historically produced long-term success.
- Gain exposure organically. Broadly diversified investors will add positions in these megacap IPOs organically in proportion to their eventual weighting in the global stock market. This is a prudent approach. If these companies become as successful as their proponents expect, our portfolios will likely participate in that upside. If they underperform in their post-IPO period, as some companies do, we will carefully consider our position.
If these market developments have you thinking about how your portfolio is positioned, we’re here to help you navigate what’s ahead.
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Not right away — but eventually, yes. As these companies go public and meet the criteria for major indexes like the S&P 500, Russell 1000, and Nasdaq-100, index funds tracking those benchmarks could automatically add positions in each company. You don’t need to take any action to participate. The timing depends on each index provider’s methodology — some are fast-tracking inclusion, while others, such as the S&P 500, are keeping their standard approach.
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We’d encourage caution here. Historically, many large IPOs have debuted at elevated prices before going through a period of underperformance — even for companies that ultimately proved successful. Rather than acting on excitement, a more prudent path is to let your broadly diversified portfolio add these positions organically. That way, if these companies perform well, your portfolio may participate in some of that growth — and if they stumble early, you haven’t taken an outsized position at a potentially unfavorable time.
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Most major indexes weight companies by the amount of stock that is available to trade in the market — not total market cap. So SpaceX’s multi-trillion-dollar valuation doesn’t directly translate to a large weighting right away. SpaceX’s initial position in either the S&P 500 or Russell 1000 is expected to be roughly 0.1%. That weighting could grow over time as lockup periods expire and more shares become freely tradable.
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Benchmarks are designed to represent the largest public companies, and waiting a year or more to include companies of this scale could leave a meaningful gap in coverage. Nasdaq, FTSE Russell, MSCI, and CRSP have all created fast-entry lanes to address this. There’s precedent for it too — FTSE and MSCI fast-tracked Saudi Aramco after its 2019 IPO. The S&P 500, however, is not changing its methodology and is not expected to include SpaceX until mid-2027 at the earliest. The staggered timing across providers spreads out the buying activity rather than concentrating it in a single moment.
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Despite the historic scale, these offerings represent more of a ripple than a disruption. SpaceX’s $75 billion float, for example, would make up roughly 0.1% of the Russell 1000’s total market cap. Goldman Sachs estimates total U.S. IPO issuance at approximately $700 billion across more than 100 companies in 2026 — a large figure in absolute terms, but one that is expected to be more than offset by gross share buybacks exceeding $1 trillion this year. In other words, capital returned to investors in 2026 could potentially help offset some of the new issuance coming to market.
1 “U.S. Weekly Kickstart: Corporate Equity Demand Should Outweigh Record IPO Supply in 2026.” Goldman Sachs, (May 29, 2026).
2 “Bloomberg Intelligence Webinar: SpaceX Reaches for the Stars Yet Challenges Abound.” Bloomberg (June 7, 2026).
3 “Bloomberg Intelligence Webinar: SpaceX Reaches for the Stars Yet Challenges Abound.” Bloomberg (June 7, 2026).
4 “U.S. Weekly Kickstart: Corporate Equity Demand Should Outweigh Record IPO Supply in 2026.” Goldman Sachs, (May 29, 2026).
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. Different types of investments involve varying degrees of risk, investments mentioned in this document may not be suitable for all investors. Investments are subject to market risk, including the possible loss of principal. Past performance may not be indicative of future results. Future investment performance cannot be guaranteed. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio. Portfolio management strategies such as diversification, asset allocation, and rebalancing do not ensure a profit or guarantee against loss. Indices are unmanaged and index returns do not include fees or expenses typically incurred in the management of an investment portfolio. Indices are not available for direct investment.
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