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Two new funds are borrowing from Mean Girls’ Gretchen Wieners, telling Elon Musk: “You can’t sit with us.”
Subversive ETFs filed with the Securities and Exchange Commission last week to launch a pair of “ex-Elon funds,” including the Nasdaq-100 Ex-Elon Enterprises ETF (QQNE) and S&P 500 Ex-Elon Enterprises ETF (SPNE). The actively managed products offer exposure to the Nasdaq-100 and S&P 500, respectively, but ditch any securities in companies founded, controlled, led or primarily associated with Musk. In other words, mostly SpaceX and Tesla.
There are plenty of reasons investors may want to kick the world’s richest man out of their portfolios: his polarizing views and right-wing politics, including an on-again-off-again alliance with President Trump, his controversial labor practices, market-moving comments on crypto and, of course, his handling of chainsaws, just to name a few. But will that actually compel investors to move assets into these new funds?
“In theory, the ETF is an interesting idea, since many investors may have strong opinions about Elon Musk,” said Aniket Ullal, head of ETF research and analytics at CFRA. “In practice, however, it will have to overcome several challenges.”
X’ing Out Musk
This isn’t Subversive’s first time hoping that excluding certain types of investments will curry favor with investors. Its Subversive Metaverse ETF (PUNK), which focused on metaverse companies but excluded Meta, launched in 2022 before being shut down the year after. But this time, it’s betting that excluding Musk’s companies will lure investors who view the “potential corporate governance concerns, political risks, and heightened share-price volatility” often tied to those firms as “less desirable,” per the filing.
It likely won’t be an easy road for QQNE and SPNE, Ullal said:
- He pointed out that Tesla and SpaceX together constitute less than 5% of the Nasdaq-100, so QQNE may not be sufficiently differentiated from the Invesco QQQ Trust (QQQ), the largest ETF that tracks the index.
- The funds could also underperform when Tesla and SpaceX stocks are doing well. “It may test whether investors are willing to sacrifice performance for values or politically related reasons,” he said.
Subversive said the firm cannot comment as it’s in a quiet period after filing, while fund advisor Tidal Investments also declined to comment.
Shorting Celebs: Betting against influential names, whether they be companies or individuals, can be challenging. The Inverse Cramer Tracker ETF, which shorted stock picks of CNBC’s on-air personality Jim Cramer, closed in 2024 after less than a year on the market.
