New 'Ex-Elon' ETFs could be on the way, allowing investors to avoid exposure to Elon Musk's companies. Are the funds a gimmick?

For more growth-oriented investors, there’s the Nasdaq-100 Ex-Elon Enterprises ETF (QQNE) with every mega-cap tech company except Tesla and SpaceX. Subversive will also offer the S&P 500 Ex-Elon Enterprises ETF (SPNE), which tracks the 500 largest U.S.-based companies, excluding Tesla.

According to data from Slickcharts, removing Tesla from the S&P 500 reduces its total weight by about 2.2%. However, the impact to the Nasdaq-100 is more substantial, since Tesla and SpaceX now account for about 8.4% of the index.

News of Subversive’s proposed ETF launch happened shortly after SpaceX joined the Nasdaq-100 index thanks to new “fast track” rules that helped it enter this elite group less than a month after its IPO. According to a Reuters report, JPMorgan estimated that this inclusion alone could be enough to attract $4.3 billion from fund managers forced to add it to their Nasdaq-related portfolios.

As it becomes harder to avoid propping up Elon Musk’s empire, Subversive’s products aim to offer the same degree of diversification for those who don’t like Elon Musk’s personality or politics.

According to Pew Research, 36% of Americans are already in this camp. All of these respondents said they had a “very unfavorable opinion” of Mr. Musk.

MoneyWise reached out to Subversive Capital, but we were told they couldn’t comment since their SEC filing is still in the waiting period.

Is the anti-Musk trade worth your money?

​While there are plenty of people who aren’t Elon Musk fans, not everyone is convinced these ex-Elon ETFs are such a great idea.

In fact, ETF.com’s former managing director Dave Nadig told MarketWatch flat out that he thinks they’re “gimmicks” and he’s “extraordinarily skeptical” they will succeed.

To support his argument, Nadig discussed a similarly niche ETF announced in February 2023 that offered a way to bet against popular “Mad Money” host Jim Cramer. After about a year, Tuttle Capital Management scrapped this offering because it simply didn’t attract enough funds.

But even if Subversive’s ETFs last longer than the ill-fated Inverse Cramer Tracker ETF, there’s still the question of whether investors will be happy with their portfolio’s performance.

After all, Tesla’s stock soared roughly 87% over the past five years, contributing to the upward momentum of the S&P 500 and the Nasdaq.

Although we don’t have historical data for SpaceX, a flurry of Wall Street analysts ranging from Morgan Stanley to JPMorgan now claim it’s poised for upside.

There are no guarantees that Musk’s companies will perform well in the long run, but investors interested in these kinds of products need to be comfortable with the risk of missing out on potential gains.