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If you are an index investor, it is probably not worth your time and energy to make any drastic changes because of this particular incident. Space X will comprise a small percentage of the indexes in question, and any impact on your portfolio will likely be imperceptible. And if your holdings are in a taxable account, the tax hit from selling are probably not worth it.

Longer term, folks should be aware that Wall Street has fully caught on to the normalization of index investing and have been looking at ways to use passive investors as exit liquidity. Private equity and private credit are the two recent high profile examples. There was an executive order recently that directed the federal government to consider allowing these asset classes into 401k's. And these sectors have been increasingly making there way into the public markets in various ways (which is ironic considering the name of the asset class). Same story with crypto.

In the past, most passive index investors worried about fees and portfolio composition and diversity. But moving forward it is probably worth thinking about index governance as well. For example the S&P500 has a one year waiting period before an public company can be considered.

Do you have specific recommendations for particularly well-governed indexes? Is something like ESGV insulated from such manipulation? Or is it time for investors to start building their own direct/custom indexing with something like Frec
I have stopped doing index investing and have switched to actively managing my portfolio, so I haven't spent much time looking into it. I have seen a few posts on reddit (r/bogleheads in particular) and it looks like there are some names getting thrown out over there, as well as discussion about particular ETF's rules regarding these types of changes.
My recommendation is do not take investing advise from any post on HN. They are notoriously bad about understanding capital markets. There are a few good posters here but they are boring [factual] with 0 replies.