Have clients already started calling about the possibility of a SpaceX IPO?
If so, what do you do when they want to participate? Can you even get access to shares before the IPO?
The simple answer is that, for most clients, you aren't going to purchase individual IPO shares directly (unless you're managing portfolios built entirely with individual stocks). Instead, they will likely gain exposure through the index funds and mutual funds they already own.
Remember, when a company like SpaceX goes public, the indexes that are designed to hold it will eventually need to buy it. Many S&P 500 funds will own it if and when it qualifies for inclusion. Technology, Nasdaq, growth, aerospace, and other sector-specific funds may also add it. In other words, your clients will likely have exposure even if they never own the stock directly.
More importantly, if you've done your job well, you've already created a financial plan and portfolio allocation designed to help clients achieve their goals. Presumably, that plan does not depend on hitting a home run with a single IPO.
Our firm's philosophy is simple: take the least amount of risk necessary to accomplish a client's objectives. If we add SpaceX as a standalone position on top of the exposure already embedded within the ETFs and mutual funds we own, we could end up overweighting the stock and taking more risk than is necessary to achieve those goals.
Clients are naturally drawn to the exciting upside stories that accompany high-profile IPOs. What they often forget is that IPOs can be volatile, and many experience significant pullbacks after the initial excitement fades.
Stay focused on the plan you've created. Don't let shiny objects distract you from a disciplined investment process.