SpaceX IPO: Did you know you can still invest without buying the stock directly?

Shares of Elon Musk's SpaceX made a strong debut on Nasdaq on Friday, 12 June, listing at $150 apiece, an 11% premium to its issue price of $135. The listing marked Wall Street's largest public offering and valued the rocket maker at roughly $1.96 trillion. Although the stock opened below Wall Street expectations, it soon gained momentum and climbed to $164, delivering a return of nearly 20% over the IPO price.

While the strong debut has heightened investor interest in the company, experts who spoke to CNBC cautioned against chasing newly listed stocks solely due to the hype of an IPO. They told the publication that newly public companies are often unprofitable in the early period and buying such individual stocks instead of investment funds can make that volatility more acute for unwary investors due to their concentrated positions.

Hence, if you are seeking exposure to SpaceX with potentially lower risk, mutual funds and exchange-traded funds that hold the stock can offer an alternative by providing diversification alongside participation in the company's growth.

How to get access to SpaceX via index funds?

Investment funds generally fall into two categories: actively managed funds and passively managed funds. Active funds rely on fund managers to select securities they believe will outperform the market, while passive funds replicate the performance of a specific benchmark index.

Passive funds, commonly known as index funds, track a market index and offer diversification at a lower cost. Historical data shows that, over the long term, such funds generally outperform those in which money managers actively pick stocks, the publication noted.

Many index fund investors will get access to SpaceX within days or weeks following the IPO, experts told CNBC. However, the timeline depends on the specific criteria established by various index providers. It ranges from a few days to more than a year.

Nasdaq adds a newly listed company to the Nasdaq 100 index as soon as 15 trading days after its IPO if it ranks among the index's 40 largest stocks determined on the basis of market capitalisation, a criterion SpaceX is expected to meet. If a company does not qualify in this process, its entry into the index typically takes longer, often around three months.

Some of the index providers, including Nasdaq and FTSE Russell, relaxed their inclusion policies this year to "fast-track" the adoption of mega-IPOs into their respective indexes, the publication noted.

Unlike index funds, which typically add newly listed companies only after they are included in benchmark indices, active fund managers can build positions before or shortly after an IPO.

For example, eight active funds, including mutual funds, ETFs and closed-end funds, have held positions in SpaceX that exceeded 10% of their net asset value, CNBC reported, citing Morningstar data as of 1 June.

Those funds, from most to least exposure, are: