Betterment Core Portfolio

2026's IPO pipeline: What it means for portfolios The mechanics behind mega-cap IPO inclusion—and what advisors and plan sponsors should know before these companies hit the indexes. A wave of high-profile IPOs is coming to market in 2026, and the names involved are unlike anything the market has seen in years. SpaceX, OpenAI, and Anthropic are all targeting public listings this year, with a combined estimated valuation exceeding $3 trillion, though only a portion of that value will initially come to market. How much comes to market, and when, is something each company and its underwriters are managing deliberately. The relevant question isn't whether these companies will dominate headlines. It's how they'll enter the indexes, how much exposure your clients and participants will actually have, and what that means for portfolio construction going forward. How these companies enter the indexes and when When a company goes public, its shares don't automatically land in broad market indexes. There's typically a seasoning period that gives markets time to establish pricing, assess financials, and let float develop. But the scale of the 2026 IPO pipeline has prompted several major index providers to revisit those timelines. The changes vary, and the differences matter. The NASDAQ-100 Index moved first. On May 1, 2026, it introduced a fast-track entry process for mega-cap IPOs, reducing the required trading period from three months to 15 days when certain criteria are met. It also replaced the minimum float requirement with a modified market capitalization test. The practical result: a company like SpaceX could be eligible for inclusion in the NASDAQ-100—and by extension the $500B QQQ ETF—within two weeks of its IPO. CRSP, which powers the Vanguard Total Stock Market ETF (VTI, ~$1.8T AUM), already had a five-day fast-track in place and is keeping it. What changed is the addition of a float-adjusted market cap test that gives large IPOs a clearer path to qualifying even when their public float is limited. SpaceX could appear in VTI within five trading days of going public. FTSE Russell has proposed a fast-entry framework for IPOs expected to rank among the top 500 U.S. companies by market cap, with potential inclusion around five trading days post-listing. Those changes are still subject to final consultation. MSCI has proposed simplifying its early inclusion criteria by introducing transparent size thresholds anchored to its existing Mid Cap market cap levels. Under the proposal, large IPOs would typically be added after the tenth trading day. Also still subject to final consultation. The S&P 500 is the notable exception. Following its own consultation in early June 2026, S&P Dow Jones Indices opted to maintain existing eligibility requirements for the S&P 500, S&P MidCap 400, and S&P SmallCap 600, including the 12-month seasoning requirement and the positive GAAP earnings screen. S&P did introduce a fast-track for its broader Total Market Index and Dow Jones U.S. Total Stock Market Index, allowing eligible mega-cap IPOs to enter within five business days. But the flagship S&P 500 is holding the line. Float-adjusted weighting: Why the headline valuation isn't the portfolio weight Even for indexes that fast-track these IPOs, the exposure your clients or plan participants will have is likely much smaller than the companies' total valuations suggest. That's because most major indexes weight constituents by float-adjusted market cap, not total market cap, and the 2026 mega-cap IPOs are expected to launch with very limited public float. Take SpaceX: With a targeted valuation approaching $2 trillion and a planned raise of up to $75 billion, only roughly 3–4% of total shares would be publicly trade-able at IPO. The remaining ~96% stays locked up with Musk, employees, and private investors. The NASDAQ-100's updated rules add a 3x float multiplier for weighting purposes, so a 4% float is treated as a 12% adjusted float. Applied to SpaceX at its expected IPO size, that translates to an adjusted market cap of roughly $225 billion rather than the full $2 trillion. The result is an estimated index weight likely in the 0.5–1% range for the QQQ. That's still meaningful, but a far cry from what the headline valuation alone would imply. Across indexes, some analysts estimate cumulative passive demand for SpaceX could reach $20 billion in the weeks immediately following its IPO, representing roughly a quarter of its targeted raise absorbed by index funds mechanically, independent of fundamental valuation. That demand dynamic is worth understanding when evaluating post-IPO pricing. What this means for Betterment portfolios For those invested in Betterment's managed portfolios, exposure to these companies will depend on which portfolio they're in—and which underlying ETFs that portfolio uses. The Betterment Core portfolio primarily accesses U.S. large-cap equities through State Street ETFs that track the S&P indexes (including SPYM, which tracks the S&P 500). Given S&P's decision to maintain its 12-month seasoning requirement, Core portfolio investors are unlikely to see SpaceX, OpenAI, or Anthropic appear in their holdings anytime soon following IPO. That eligibility clock starts at listing. Other Betterment managed portfolios, including Value Tilt, Innovative Tech, SRI (Broad, Climate, and Social), and GS SmartBeta, use total market ETFs such as VTI, or actively managed ETFs. Clients and participants in these portfolios have a meaningfully higher likelihood of gaining exposure to these companies shortly after listing, given the faster inclusion timelines at CRSP and other providers. This is a distinction worth surfacing in client and participant conversations, particularly for advisors whose clients hold multiple Betterment portfolios or for plan sponsors whose participants are distributed across portfolio options. Concentration: A broader portfolio consideration Beyond the mechanics of index inclusion, the addition of $3 trillion in primarily tech and tech-adjacent companies has the potential to accelerate an existing trend. Technology and tech-adjacent sectors like Communication Services account for over 40% of the S&P 500. For investors relying on broad market index funds for diversification, it's worth framing this clearly: The indexes will continue to reflect the market as it is—that's the point. But as the market itself becomes more concentrated in a small number of mega-cap names, the diversification benefit of any single broad index fund can erode. This isn't new. The 2026 pipeline would meaningfully accelerate a trend that's been building for years. For advisors, this is a natural conversation to have around asset allocation, particularly for clients who may not realize that their "diversified" index exposure has grown more concentrated over time. For plan sponsors, it's worth considering how participants are distributed across portfolio options and whether the default investment mix reflects the risk profile appropriate for your workforce. For clients who want more customization without giving up automation and tax efficiency, Custom Portfolios will offer a new way to build a portfolio using both ETFs and individual stocks. One important note for clients considering direct IPO positions: The concentration of price-insensitive demand from index funds and retail buyers may temporarily support post-IPO prices in the immediate weeks. As lockup periods expire and float expands, those dynamics can shift materially. Sizing and timing relative to the broader portfolio matters. The bottom line The 2026 IPO pipeline is significant, but the implications for managed portfolios are more nuanced than the headlines suggest. Exposure will vary by portfolio, float dynamics will limit initial index weights, and concentration risk is real but manageable with the right asset allocation. For advisors and plan sponsors, the value is in understanding the mechanics well enough to have clear, confident conversations with the people who are counting on you.