European pension funds have been taking stock of US markets ahead of this week’s planned initial public offering (IPO) of SpaceX after markets tumbled last Friday amid stronger-than-expected US payrolls data and in light of the continuing conflict in the Middle East. Many European investors have already taken a cautious stance on US equities following president Donald Trump’s tariff policy announcement last year with concerns about valuations more generally.
Elon Musk’s SpaceX is expected to raise just $75bn in its planned IPO, listing a low percentage of shares, but its founder will maintain control thanks to a dual-class share structure and a corporate governance set-up that many investors have found wanting.
At Aberdeen Investments, Ben Ritchie, head of developed market equities, suggests that investors’ reaction to SpaceX’s IPO will be “a question of faith or discipline”.
“SpaceX’s IPO will test more than investor appetite for growth,” he says. “It will test their willingness to embrace a new model of public equity ownership: high valuation, limited governance rights, and faith in a founder-driven vision.”
Late last month, without referencing SpaceX specifically, Ryan Boothroyd, head of external management at Border to Coast Pensions Partnership, the £120bn (€139bn), said asset owners currently face a tension whereby they can’t afford to be structurally absent from the largest index names if they continue to dominate but “[n]or can we blindly accept today’s index as the right answer for the next 20 years, particularly when starting valuations and concentration imply weaker forward returns, especially versus liability proxies such as cash or Gilts”.
One of the main talking points of the SpaceX IPO – and the anticipated follow-ups from Anthropic and OpenAI – has been what Ninety One analyst Anton du Plooy refers to as the market mechanics, whereby “[i]ndex providers have been scrambling to update their rules ahead of what could be the largest concentration of capital ever brought to market simultaneously”.
“Nasdaq has revised its eligibility framework to admit new mega-cap listings to the Nasdaq-100 after as little as 15 trading days, and FTSE Russell has moved similarly,” he noted in a comment this morning.
“For trackers of those indices, the passive feedback loop is real and imminent: passive buying drives up the price, that performance pressures active managers to follow, which begets more passive buying, largely independent of whether the underlying fundamentals justify it.”
Cautious optimism
Denmark’s PFA Pension has taken a more bullish stance on US equities than some of its European peers, maintaining its investments in large US tech companies in 2025 while increasing dollar hedging. PFA’s investment team describes the SpaceX IPO as “exciting to follow” and the scheme has highlighted the strong contribution from large-cap US tech stocks in terms of member returns.
Tine Choi Danielsen, PFA’s equity strategist, said on Tuesday: “Tech companies are increasingly seeking to raise new capital because forward‑looking investments in artificial intelligence, data centres and global logistics have become enormous and capital‑intensive – even though the companies continue to make good money.
“The massive multi‑billion investments create growth and increased productivity in society, but they can of course also put pressure on companies’ earnings and share prices if their ambitious bets on the future and future technology do not pay off.”
“It’s vital we all argue for the good governance practices that are fundamental to sustainable growth for companies, investors and everyday savers alike”
Caroline Escott, Railpen
Railpen in the UK, meanwhile, has joined a host of US asset owners in expressing concerns about the company’s accountability to shareholders who provide its capital. In a letter delivered this week, Railpen, the Council of Institutional Investors and 17 of its member organisations urged SpaceX to reconsider its governance provisions before launching its IPO.
“With the next wave of AI firm IPOs nearly upon us, governance choices made now – and the extent to which they are accepted by investors – will shape our financial markets for decades to come,” said Caroline Escott, Railpen’s head of investment stewardship and co-head of sustainable ownership, in a post on LinkedIn.
“It’s vital we all argue for the good governance practices that are fundamental to sustainable growth for companies, investors and everyday savers alike.”
Other investors have been vocally opposed to investing in SpaceX.
Among Nordic pension funds, Denmark’s AkademikerPension has been most outspoken about the high-profile upcoming IPO, saying in advance that it had decided to blacklist SpaceX.
“The decision is based both on an assessment that the expected stock market value has run out of steam and on deep concerns about the company’s management,” the pension fund said.
At ATP, meanwhile, a spokesman told IPE it was at least unlikely the Danish statutory pension fund would invest on day one – and referred to ATP’s general approach to investments in the listed equity space and its processes when selecting equities.
In Norway, municipal pensions giant KLP said that as an index tracker, it expected SpaceX to be added to the MSCI indices via established fast-entry protocols, but with a conservative free-float factor resulting in a minimal initial index weighting for the US spaceflight firm.
Joakim Embu, portfolio manager at KLP, said: “We are still evaluating the timing for implementing this minor index change across our funds.”
Norway’s Government Pension Fund Global (GPFG) declined to comment on SpaceX specifically, but said its normal process when a newly-listed company was added to its benchmark – based on the FTSE Global All Cap index – was that it became part of the GPFG’s investment universe and its asset manager, Norges Bank Investment Management (NBIM), invested broadly in line with the index.
“The detailed rules and timing for when newly listed companies enter the index are set by the index provider,” an NBIM spokeswoman said.
Dutch exclusions
In the Netherlands, pension funds are debating whether to place SpaceX on their exclusion lists, as many have done with Tesla at the beginning of last year.
According to IPE’s sister publication Pensioen Pro, Pensioenfonds Vervoer is one of the pension schemes to have placed Tesla on its exclusion list. SpaceX is not on the pension fund’s blacklist for the IPO on Friday, but the board has yet to decide whether to remove SpaceX based on its exclusion criteria.
Similarly, pension Fund BPL also states that there is currently no reason to exclude SpaceX in advance based on its corporate social responsibility policy. Nevertheless, even for this pension fund, it is not a given that SpaceX will immediately end up in its portfolio. “In addition to the application of our exclusion policy, the developed markets equity portfolio is managed quantitatively based on a factor premium strategy. To be included in the portfolio, SpaceX must also meet the preconditions of the factor premium strategy,” the fund told Pensioen Pro.
Stephan Bereuter, chief investment officer at Migros Pensionskasse, the CHF30.1bn pension fund of Swiss retailer Migros, said a SpaceX IPO “would be interesting in principle, as it would provide access to a company that has previously been difficult to invest in”.
However, for broadly diversified, index-tracking investors such as pension funds, meaningful exposure would only become relevant once the company is included in major indices, he added.
The pension fund expects AI to continue gaining importance, a trend that is automatically reflected in market indices.
“Accordingly, we participate in this trend primarily through index performance rather than through targeted individual stock selection,” he said.
Bereuter noted that a large technology stock listing could further increase market concentration. Against this backdrop, rising concentration in a handful of sectors was a key consideration in Migros Pensionskasse’s latest asset-liability management study, leading the fund to incorporate a dividend strategy into its strategic asset allocation.
“This strategy deliberately features a heavier weighting of traditional sectors, such as healthcare and consumer goods, and lower exposure to technology,” Bereuter said.
In Germany, Christian Remke, chair of the board of directors at Metzler Pension Management, said a SpaceX IPO would not materially alter the investment due diligence process.
“Regardless of whether one invests via a fund or directly, the first step is always a thorough analysis, and the decision on whether or not an investment makes sense is based on that,” he said.
Metzler’s global equities portfolio manager Steffen Tolzien said the SpaceX IPO would likely further intensify the already high concentration in equity markets.
The high market capitalisation of SpaceX, which targets a valuation of $1.7trn, would give the stock significant weight in major indices, forcing passively managed index funds (ETFs) to acquire the stock on a substantial scale, he said.
“There is a risk that the stock price could be directly tied to Elon Musk’s reputation and that the company might launch with an excessively high valuation despite lacking solid fundamentals”
Alessandro Ferretti, Fondo Pegaso
Moreover, the planned issuance volume of approximately $80bn could lead to capital outflows from other stocks, further increasing concentration in equity markets, Tolzien added.
Alessandro Ferretti, head of finance at Italian utility workers’ pension fund Fondo Pegaso, said a SpaceX IPO would certainly generate “frenzy and sparking curiosity” in financial markets. However, he does not see a compelling investment case for the company.
“Instead, there is a risk that the stock price could be directly tied to Elon Musk’s reputation and that the company might launch with an excessively high valuation despite lacking solid fundamentals,” he said.
Ferretti described the aerospace sector as “a major unknown”, noting its heavy dependence on US government and NASA subsidies. He also pointed to the risk that contracts may not be renewed or could even be terminated before their scheduled expiry.
Governance and valuation
For Lindsey Stewart, director of stewardship research and policy at Morningstar Sustainalytics, investors should not let enthusiasm for SpaceX obscure the risks around governance and valuation.
Speaking personally, he said: “I would not choose to invest in a loss-making company that is valued at over 90 times revenue […] I can’t see a case for that.”
At the same time, he argued that index providers should not act as governance watchdogs. Instead, “inclusion should actually be completely neutral and should be a metric of what’s on the market to buy.”
Questions about whether a company should be available to ordinary investors are ultimately matters of regulation rather than index construction, he told IPE.
For investors, he advised not to rush in. Instead, he said: “It is worth waiting it out and seeing what the situation looks like with free float and eventual market valuation once there is a larger proportion of shares in the market being traded.”
More broadly, Stewart argued that governance concerns should neither be ignored, nor be viewed in isolation. He said: “Governance concerns aren’t the be all and end all in the investment case,” adding that companies with unconventional governance structures have still delivered strong returns for investors.
