I really want a QQQ/VOO replacement that excludes these new rushed IPOs that are just exit liquidity. There are ETFs that exclude harmful industries like gambling, weapons and tobacco. How about an ETF that doesn't include IPOs for six months or until insider lock ups periods are over.
Dimensional runs a bunch of ETFs which are effectively US & world equity index trackers that don’t slavishly follow the indices & can therefore avoid being forced to buy into IPOs or index updates. E.g. DFUS is effectively VTI (IIRC) without the requirement to immediately buy into IPOs that are added to the index:
I don’t think they have a QQQ equivalent but I haven’t looked at their entire ETF list.(I have no relationship with Dimensional, nor do I invest in these funds - I just saw them mentioned in a YT video on this topic a few months ago: https://www.youtube.com/watch?v=mqIHa6URUPk )
I knew that would be a Ben Felix vid. He's awesome.
It's important to note, that whether it's intentional (doubt) or genuine mistake, he's misleading viewers when he says that Dimensional has outperformed other funds or indexes. In fact most of the Dimensional funds have underperformed markets, and they do so at higher (albeit approachable) TERs of 0.25.
There's a (rather short for his standards) video made by Paolo Coletti, professor of financial economy at Trento about dimensional performances.
It's in Italian, but both subtitles and Youtube's auto audio translation works fine.
He always includes data and google colabs so people can run tests and verify numbers themselves if they disagree.
https://www.youtube.com/watch?v=j_tBfYHh1J4
Most of the Dimensional ETFs seem to be following some kind of value investment strategy where they take an index but nudge it a bit by some value factor which is claimed to be based on long standing research. It wouldn’t be surprising if this value factor has underperformed in recent years which have been dominated by the rise of growth stocks. The video you link to seems to be talking about these ETFs, although I haven’t dived into the numbers.
As far as I can tell the straightforward US & world equity ETFs I’m referring to above don’t have this value bias.
The value ones mentioned by Felix do.
In the video I linked Felix only talks about DFUS, which has no value tilt.
He may talk about their other funds in other videos, but not this one.
I think VGT is a good QQQ replacement. It is based [1] on the MSCI US Investable Market Information Technology 25/50 Index which is free-float adjusted [2] [3], meaning that SpaceX will have a lower weight due to its lower free float. Also, VGT has a substantially lower expense ratio (9 bps / year [4]) than QQQ (18 bps / year [5]). You can compare VGT and QQQ's holdings on these pages [6] [7].
[1] https://fund-docs.vanguard.com/F0958.pdf
[2] https://www.msci.com/indexes/documents/methodology/2_MSCI_25...
[3] https://www.msci.com/documents/10199/6bafd9e3-0474-f03b-16bd...
[4] https://investor.vanguard.com/investment-products/etfs/profi...
[5] https://www.invesco.com/qqq-etf/en/about.html
[6] https://stockanalysis.com/etf/vgt/holdings/
[7] https://stockanalysis.com/etf/qqq/holdings/
No it’s not. When the asset management industry says “information technology” they exclude the technology used for communication. That’s why VGT doesn’t invest in GOOG or META. AMZN is consumer discretionary so it’s also excluded.
That's fantastic. Thanks! I actually use QQQM which has lower fees. Seems like Invesco pulled a trick from marketing and segmented the market to have it both ways. I also need to find leveraged ETFs that have float adjusted weights which is a bit trickier. I might just pull out of TQQQ until the dust settles.
A long and a short cancel out. So you could construe this yourselves. (Recognise that this has a long tradition on HN ;)
Besides laziness being a tradition among programmers (in a good way), that kind of complex activity is going to generate tax in a lot of jurisdictions.
If you care to explain why, I’m interested. I imagine a situation where large Sum X is in ETF but gets adapted by a few little shorts. It’s still mainly the ETF in the portfolio. (Exactly this is why in my firm some ETFs are deemed too precise, since they are thought to follow the insider knowledge as well.)
Well this used to be the rule until it was changed just a few months ago on anticipation of this very SpaceX IPO.
VTI avoids these issues. It's float adjusted market cap weighted. More float allows better price discovery. So a company like spacex has negligible weight.
So are other major index funds. That's not the problem.
The problem is that the NASDAQ 100 and most likely also S&P 500, change their rules to permit SpaceX to be added early without traditional time for price discovery. It happens jsut five trading days before the major index rebalance.
After float adjustment SpaceX could be 1% of NASDAQ and 0.7% of SP500, but after full tranche escalation that takes over 130 days, SpaceX weight can be over 3% of NASDAQ and almost 2% of SP500 if the market cap stays near $1.5T.
(I think the price will decrease, so the weight will be smaller)
This is just a ploy to get exit liqudity as brikym, said. SpaceX collects enough capital to pay Twitter acquisition loans and then some, but the IPO not major boost for SpaceX finances. The coming merger with Tesla is clearly in the plans (C stocks).
> five trading days before the major index rebalance.
I didn't realize this. That's really scammy.
Musk in a nutshell, but as long as the stock price goes up everyone looks the other way.
Yeah when they crash and burn everyone will be like "how did we let this happen?".
You are making a mistake in equating several things here. Not only is this SpaceX IPO that has latched itself onto pensions through accelerated inclusion in the S&P100 and other funds a different and rather unique matter, but excluding harmful industries is really rather stupid of people who oppose those industries.
If, e.g., all those who opposed those industries had instead bought the industry stock, the people with those ideals opposed to those industries could have at the very least profited from the sale of the stock...which the company itself basically does not see direct benefit from (you are not buying the stock from the company or giving the company any money in most case)...and used/committed that money to even greater opposition. If a catalytic number of those had formed, they could have also even made real impact through shareholder initiatives and actions demanding changes by pressuring board members who rely on votes, etc.
It's one of those nonsensical, moralistic and ...sorry... foolish mindsets that common people have, the idea that simply by not participating the King will leave them be. The psychopathic narcissists in control will never leave you be, no matter how much you virtue signal by not buying their stock from someone else that is not the company or no matter how much you ask or how far you run and beg and ask to be left alone.
Frankly, although I am not certain that it was done intentionally, if I were a major mover and more powerful person, I would propose the very kind of moralizing, self-righteous campaign that has shot the commoners in their feet by getting them to simply check out and not participate in things the could have otherwise controlled a lot more.
So instead of people who actually care...but are clearly rather foolish...all/a disproportionate amount of control and power and money is left to those who do not have those qualms. Hence why none of this "excluding harmful industries" has affected anything whatsoever and we now have square mile measured AI data centers and tens of millions of low climate impact people being moved into high climate impact countries, and we have more war and death and addiction than humanity has seen in 90 years.
In case it is not yet clear to some of us, a stock is like if you went to some second hand/thrift store and bought a brand of clothing that was reviled for some reason or another, i.e., use of child sex slave labor, you giving a thrift store money to wear the second hand clothing not only does not benefit the reviled company, but just alone wearing second hand clothing will likely have more a positive impact than guying some other company's clothing that will later turn out to have used regular child labor.
"... a stock is like if you went to some second hand/thrift store and bought a brand of clothing that was reviled for some reason or another, i.e., use of child sex slave labor, you giving a thrift store money to wear the second hand clothing not only does not benefit the reviled company ..."
This is incorrect and, frankly, ridiculous especially in light of your own scoffing at the "foolishness" of others.
The secondary market value for company stock has a direct impact on current and sustained operations in areas including, but not limited to:
- the ability to sell debt and the interest rates at which it can be sold
- the ability to attract and retain executive "talent" with stock compensation
- the ability to attract - or ward off - takeovers and buyouts from other firms
- the ability to expand operations, or development, through follow-up offerings
Your observation of this basic truth (that company shares purchased by at-large market participants don't yield funds directly to the firm) is, of course, correct.
However it is not as profound a factor as you think it is.
While not wrong, your perspective is very simplistic. A company gains massively from strong stock performance - they can issue more shares to raise capital, give handouts, take loans at better rate, pursue M&A with stock payment, ... So anyone who buys stock they ethically disagree with is certainly supporting that company - and inversely not using those funds to the advantage of other companies that they find morally more appealing.
The point of these broad ETFs is that they include everything. Let the market decide. Of course they should own one of the largest public companies in the world. They're changing the rules on inclusion because the ipo is unprecedented and not owning it because [reasons] would be a dereliction of their duties.
You want an ESG fund
Also I dont see how weapons companies are harmful. Unless you're so naive to think defense is not a thing any person or country has to worry about in 2026
> Let the market decide... They're changing the rules on inclusion ...
You have the market deciding and the rules changing in the same paragraph and nothing's bothering you. I genuinely envy your peace of mind, my friend. Some of us are truly blessed.
The rules changed because it's unprecedented. It's not complicated. If your job is to "track the market" and there is this company that is worth $1+ trillion, you're not doing your job if you don't have exposure to this company.
Just be honest with yourself. The only reason you and others have an issue is because of politics. You don't like Musk for whatever reason and now you're very opinionated about the internal workings of index selection, when prior to reading about it in the NYT or something, you had no idea.
You don't care about the arcane byzantine process, you think rocket man is bad. I feel bad for people that get so easy manipulated. It's a hell of a way to live your life, waking up and reading corporate media to tell you what you should be angry about today
Ignoring the moral questions, the issue is that the old waiting period had a purpose. The market *isn't* getting an opportunity to decide here. There's a concern that these are a glorified pump & dump where initial investors extract all the value via the IPO and then the price craters once it's on the open market.
It'd be nice to give the market a period of time to figure out what it *really* values these companies.
> moral questions
Do you hear yourself? This is about index inclusion.
I stated that because most of this thread is on that topic and specifically didn't want it involved for this. I'm sorry if you're too biased on the topic to take that into account.
Doesn’t matter that it’s unprecedented by value, Whole point of rules is confirm that value isn’t fake by letting the market stabilize after IPO and then if value is there, it’s added to the index. Yes, some money could be lost if value is there but reverse is true as well.
Hang on, wasn't the market supposed to work it out? How come it's someone's job to fast-track inclusion? Isn't intervening directly in the market a communist policy? Are you a communist by any chance?
I think their point is not the ESG component, but firms with traditionally irrational valuations (à la GameStop) for which index inclusion exceptions have been made to facilitate short term liquidity for IPO participants. Seems as though one should be able to hold the broad market less that component.
Let the market decide what, though? What the market cares about may be different from what you care about, if the average investor has a higher tolerance for risk that you do. For pension funds, long term stability is key. A wide spread of large companies has traditionally been a good way to achieve that, but that isn’t guaranteed.
> Let the market decide. Of course they should own one of the largest public companies in the world.
The pension fund is the customer here. The market is already deciding. You're free to invest your own money as you see fit. The pension fund's money is not yours to decide what to do with.