Index funds have been gaining traction in recent years, and now they may be a bigger stakeholder in Tesla than even Elon Musk. Musk has long been critical of passive investment, but it appears his company is now benefiting from its inclusion in the S&P 500.
At the time of Tesla’s inclusion in the S&P, nearly $2 trillion in index funds were forced to purchase the automaker’s shares. Now three of the market’s largest index funds, BlackRock, Vanguard and State Street, together hold a larger stake than Musk himself.
Vanguard is now the second-largest shareholder of Tesla with a 6.85-percent stake, followed by Blackrock with 3.6 percent and State Street with 3.13 percent. While Musk’s stake has dropped, he still owns 13.02 percent of the company’s shares.
Musk has also been vocal in his support of active investment over passive funds in the past. He believes that passive has gone too far and there should be a shift back towards active investment. However, Tesla’s index fund ownership is still lower than the average passive ownership of most U.S. companies listed on the stock market.
The news of index funds holding a larger stake in Tesla comes shortly after the company’s issuer rating was upgraded to a “Baa3” by Moody’s. This means the stock is now considered to be investment-grade and Tesla is meeting its financial commitments and demonstrating leadership in its market.
Overall, it appears that despite his criticism of passive investing, Musk may be benefiting from its inclusion in the S&P 500. The three index funds are now the largest stakeholders in Tesla and are likely investing in the company’s stock with their active funds. Even though Musk’s stake has decreased, he is still the largest individual shareholder with a 13.02-percent stake.
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