How SpaceX Landed in an Indian Nasdaq ETF

SpaceX began trading in the US on 12 June. On 7 July, Nasdaq put the company behind Falcon rockets and Starlink satellite internet into the Nasdaq-100. That decision reached Indian brokerage accounts through the Motilal Oswal Nasdaq 100 ETF, which tracks the index. Goldman Sachs research reported this week found that the addition had made only a small difference to the index’s overall performance so far. For an investor who already owned the Indian fund, a decision in New York put a new stock in the basket they held in rupees.

How did you get SpaceX exposure without buying its shares?

The fund bought SpaceX. When you own a unit of an exchange-traded fund, or ETF, you own a slice of the fund’s portfolio. Motilal Oswal’s ETF trades in India under the symbol MON100. Its job is to follow the Nasdaq-100, a benchmark of 100 of the largest non-financial companies listed on Nasdaq. When the benchmark added SpaceX, holding SpaceX became part of the job. You still had the same ETF units in your account. The basket those units represented had changed.

Why did Nasdaq add SpaceX so quickly?

A rule that took effect on 1 May gave very large new listings a quicker route into the Nasdaq-100. Under the rule, Nasdaq can evaluate a new listing on its seventh trading day if its full market value puts it among the 40 largest companies already in the index. Other eligibility requirements, including a trading-liquidity test, still apply. SpaceX began trading on 12 June under the ticker SPCX. Nasdaq announced the addition on 26 June, effective before trading opened on 7 July.

Who decides how much SpaceX goes into the basket?

Nasdaq sets the benchmark weight. The fund then aims to hold the same proportion, allowing for practical differences such as cash and trading costs. For index admission, Nasdaq considers the company’s overall size, including unlisted shares. For weighting, it starts with the shares of the listed class and applies a cap if few are available to trade. The freely tradable portion is called the public float.

Take a listed share class with 100 shares, of which only 10 are freely tradable. Nasdaq’s rule would count up to 30 shares in the starting weight calculation, before other index limits. With 40 freely tradable shares, the calculation could count all 100. This helps explain how a very large company can enter the index with a relatively small weight and get a bigger one later.

How much SpaceX did the Indian ETF actually hold?

SpaceX was 2.71% of the fund’s net assets on 30 September, according to Motilal Oswal’s portfolio disclosure. At that weight, ₹10,000 of the fund’s underlying value included about ₹271 in SpaceX exposure. If SpaceX alone fell 10%, that slice would lose about ₹27, all else equal. The example holds other share prices and exchange rates steady. The actual weight can change as prices move and the fund trades.

Did the index give SpaceX a bigger slice later?

Yes. Bloomberg reported that SpaceX’s Nasdaq-100 weight would rise from about 1.28% to 2.82% when the September rebalance took effect. A rebalance is when the index provider resets the proportions of its holdings. As more SpaceX shares became available to trade, the index could count more of them. An index weight at a September reset and an Indian fund’s weight at month-end measure two different things. Between those dates, SpaceX and the other holdings could rise or fall at different rates.

Did SpaceX change the way the Nasdaq-100 behaved?

Only modestly over the period Goldman Sachs examined. The bank’s 6 November analysis, reported by Seeking Alpha, estimated that the index fell 10.3% from SpaceX’s admission over the period it studied. It estimated a 10% fall for a version that excluded SpaceX. The gap was about 0.3 percentage points. That comparison is a historical estimate. SpaceX’s future impact will depend on its weight and how it moves relative to the rest of the basket.

Why can MON100’s price move differently from its US holdings?

The fund’s net asset value, or NAV, is the rupee value of what it owns after liabilities, divided by its units. The exchange price is what buyers and sellers agree to pay for a unit in India. If units change hands at ₹110 while their underlying value is ₹100, the buyer is paying a 10% premium. If the gap closes with the underlying value unchanged, the exchange price can fall on its own. NSE has warned that limits on creating fresh units can leave some international ETFs trading at sizable premiums. Dollar-to-rupee moves can also change what the US holdings are worth in India.

What if you hold the Motilal Oswal Nasdaq 100 Fund of Fund?

That scheme holds units of the ETF, so its SpaceX exposure comes through another layer. The ETF owns the shares. The fund of fund owns ETF units. The ETF’s disclosed 2.71% figure describes the ETF’s own portfolio on 30 September. The share of the fund of fund attributable to SpaceX depends on how much of that scheme is invested in the ETF at the time.

Could SpaceX’s share change again in December?

Yes. Nasdaq’s rules use the last trading day of November for the December review. The scheduled changes take effect at the US market open on 21 December, under the published calendar. That review can change the share count Nasdaq uses and reset the weights across the basket. The benchmark update will show what Nasdaq assigned to SpaceX. A later Motilal Oswal portfolio disclosure will show what MON100 actually held.