Is Elon Musk Giving Index Funds FOMO - Spencer Jakab, WSJ
"Membership Has Its Privileges
 
Buying and holding index funds is one of the smartest things investors can do, but it’s hard. It’s even harder if they fear they’re missing out.
 
Owning pieces of America’s largest companies via an S&P 500 fund isn’t exactly the same thing as owning “the market” because some rising stars haven’t qualified for membership yet. When it looks like they’re about to join, those shares can get a turbo boost right before index funds are forced to buy. Those rallies often cool after inclusion.
 
It’s a small, invisible drag on returns most of the time because those rising stars usually aren’t huge weights in the index. Occasionally one is by the time it qualifies.
 
With Elon Musk’s SpaceX preparing for the biggest initial public offering in history, The Wall Street Journal reported this week that its advisers are pushing to fast-track the index-inclusion process. The popular Nasdaq-100 Index might be amenable. The big prize would be using index-provider FOMO to get the S&P 500 to tweak its rules.
 
The index companies wouldn’t be doing passive investors a favor, but they could be doing Musk and other insiders one. Inclusion would make it easier to sell the IPO and insider shares to the public at a potentially robust price.
 
Musk’s existing big public company, Tesla, is a classic example of forgone gains. It had a market capitalization of about $2 billion at the time of its 2010 IPO, yet failed to qualify for the S&P 500 until 2020 when it could show enough profits.
 
Tesla was the largest-ever addition to the index at the time, at about $600 billion. But investors had anticipated the wave of buying that would result and bid the stock up 250% in the six months before its S&P 500 inclusion. Then the shares fell 10% during their first six months as one of the top weights in the world’s most widely owned index funds.
 
A similar pattern has repeated for other hot companies. Google (now Alphabet) returned seven times as much in the six months prior to inclusion as during the following six. Netflix’s return was double.
 
Recent additions Robinhood and AppLovin rallied 182% and 105% before joining the S&P 500 in September, respectively. Each is down by 42% since then.
 
Why push to fast-track the process for SpaceX? Because membership has its privileges when you need to sell huge quantities of stock.
 
It could spare index-fund investors the frustration of watching SpaceX rally before they own it, but that won’t make it any cheaper once they do.
 
And, with the typical insider seller being restricted from selling stock for a number of months, the end of their “lockup period” might coincide with the shares already being owned by index funds. Eager sellers and forced buyers who don’t even read the company’s financial statements are a bad combination.
 
SpaceX could boldly go where no stock has gone before. Getting there at warp speed isn’t really necessary."

Here's the Article - Originally from Bloomberg
Amazon - 4% (to $222) during today's trading and down another 11% after-market (to $198). Often viewed as a retailer, more than half the business is in cloud based data services.
"Four of the biggest US technology companies together have forecast capital expenditures that will reach about $650 billion in 2026 - a mind-boggling tide of cash earmarked for new data centers and the long list of equipment needed to make them tick, including artificial intelligence chips, networking cables and backup generators."
-
Claude is the AI App that seems to have rocked the tech world in recent days. More entertainment than substance in this Bloomberg production -

• Do you believe that the present administration has the slightest idea where their various interests and beliefs are going to take the general economy?   @Mark, quoting Paul Krugman in another post:
"ETTD: everything Trump touches dies."
@JD_co, in another post, notes that: "A loser with 6 bankruptcies who has left a trail of destruction in his wake at every turn is steering us off a cliff."
• Do you believe that anyone really has any idea where the evolution of AI is going to take the general economy?
• Is your present financial situation such that you could be comfortable with it's present value?
• Is your present financial situation such that it would be reasonably resistant to a major financial decline?
• If not, is there a value that would be acceptable if you were to lock in some percentage of your present gains?

S&P up 65% since Jan 1, 2023. S&P is now negative YTD.
To lock in gains or let it ride is the question!

https://www.cnbc.com/2026/02/05/layoff-and-hiring-announcements-hit-their-worst-january-levels-since-2009-challenger-says.html
Layoffs in January were the highest to start a year since 2009, Challenger says
•U.S. employers announced 108,435 layoffs for the month, up 118% from the same period a year ago and 205% from December 2025. The total marked the highest for any January since 2009.
•At the same time, companies announced just 5,306 new hires, also the lowest January since 2009, which is when Challenger, Gray & Christmas began tracking such data.
•Also, job openings fell sharply in December to 6.54 million, to their lowest since September 2020. Available jobs are down by more than 900,000 just since October.
Coupled with the market gyrations, this is not a great start.
"In a separate report Thursday, the Bureau of Labor Statistics reported that job openings fell sharply in December to 6.54 million, a slide of 386,000 on a monthly basis and down more than 900,000 from the October level. Openings are now at their lowest since September 2020."

Per the WSJ...what could possibly go wrong here?
Advisers for the company, which recently merged with xAI, have reached out to major index providers, including Nasdaq, to discuss how SpaceX and this year’s other hot startups might join key indexes sooner than normal, according to people familiar with the matter.
Companies typically must wait several months or a year after their public debut before gaining inclusion in a major index such as the S&P 500 or the Nasdaq 100. Inclusion unlocks access to retail and institutional capital from funds, particularly those mimicking the performance of indexes that have to hold the companies in the index.
The traditional waiting period is intended to give the companies time to demonstrate that they are stable and liquid enough to handle extensive buying from index funds.
SpaceX hopes to skirt traditional rules in an effort to bring liquidity to its shareholders sooner as part of its planned IPO. SpaceX advisers have sought index policy changes that would fast-track its entry into major indexes for the company and benefit other highly-valued private companies, the people said.
< - >
https://www.wsj.com/finance/stocks/spacex-seeks-early-index-entry-as-it-prepares-massive-ipo-8445ed59?mod=hp_lead_pos1

PMAIX is a very boring global allocation fund and of the Seven, only has Amazon in the top 25 equities owned. It is one of a very few allocation funds to come out of 2022 in the green. @LynnBolin may own it. I'm pretty sure he has talked about it in his columns. I added it to my IRA recently.

That is correct @WABAC, I do own PMAIX and include it in one of February's articles. It's main attraction for me is the steady income in addition to capital appreciation. I like boring.

Me too. In my IRA anyway.

PMAIX is a very boring global allocation fund and of the Seven, only has Amazon in the top 25 equities owned. It is one of a very few allocation funds to come out of 2022 in the green. @LynnBolin may own it. I'm pretty sure he has talked about it in his columns. I added it to my IRA recently.

That is correct @WABAC, I do own PMAIX and include it in one of February's articles. It's main attraction for me is the steady income in addition to capital appreciation. I like boring.

@WABAC: I agree about the apparent elevated ER of ORR. The manager posted a very cogent explanation on the Militia Capital website, pointing out that the real ER is in line with other active strategies. Lack of track record for the ETF bothered me but I overlooked it in favor of the impressive investment returns of Mr. ORR prior to his starting the public fund. Tom Lee's endorsement, via our man Snowball, also deserved consideration.

What is the real ER?
I remember Tom Lee as one of the better writers at M*. Maybe if I understood what sets long/short funds apart from other types I might be more willing to look at them. But I haven't noticed that they behave all that differently in some unique way. It's possible I could be educated; possible. :-)

@WABAC: I agree about the apparent elevated ER of ORR. The manager posted a very cogent explanation on the Militia Capital website, pointing out that the real ER is in line with other active strategies. Lack of track record for the ETF bothered me but I overlooked it in favor of the impressive investment returns of Mr. ORR prior to his starting the public fund. Tom Lee's endorsement, via our man Snowball, also deserved consideration.

https://www.sec.gov/Archives/edgar/data/889284/000139834426001872/fp0097417-1_497.htm
497 1 fp0097417-1_497.htm
February 2, 2026
STERLING CAPITAL FUNDS
STERLING CAPITAL SHORT DURATION BOND FUND
STERLING CAPITAL ULTRA SHORT BOND FUND
SUPPLEMENT DATED FEBRUARY 2, 2026
TO EACH OF THE CLASS A AND CLASS C SHARES PROSPECTUS, INSTITUTIONAL AND CLASS R6 SHARES PROSPECTUS, SUMMARY PROSPECTUSES AnD STATEMENT OF ADDITIONAL INFORMATION
each DATED FEBRUARY 1, 2026, AS MAY BE supplemented from time to time
At a meeting held on November 19, 2025, the Board of Trustees (the “Board”) of Sterling Capital Funds (the “Trust”), after careful consideration and upon the recommendation of Sterling Capital Management LLC, the investment adviser to the Trust (the “Adviser”), approved the conversion (the “Reorganization”) of each of the Sterling Capital Short Duration Bond Fund and Sterling Capital Ultra Short Bond Fund (each a “Mutual Fund,” and collectively, the “Mutual Funds”) into the Sterling Capital Short Duration Bond ETF and Sterling Capital Ultra Short Bond ETF, respectively (each a “Survivor Fund,” and collectively, the “Survivor Funds”), which are new series of the Trust that will operate as exchange-traded funds (“ETFs”). Each Reorganization is expected to occur by 9:00 A.M. Eastern Standard Time on or about March 30, 2026 (the “Closing Date”). The Survivor Funds will not commence operations before the completion of the Reorganizations and do not have existing shareholders. Shareholders of the Mutual Funds are not required to approve the Reorganizations, and shareholders will not be asked to vote on the Reorganizations.
The Board, including all of the Trustees who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Mutual Funds, determined that participation in the Reorganization is in the best interests of each Fund and its shareholders and that the interests of shareholders of the Mutual Funds will not be diluted as a result of the Reorganizations. Each Survivor Fund will have the same investment objective and substantially similar principal investment strategies as those of its corresponding Mutual Fund, and the investment adviser and portfolio management team for each Survivor Fund are expected to be the same as those of the corresponding Mutual Fund. The total annual fund operating expenses of each Survivor Fund are expected to be lower than those of each class of the corresponding Mutual Fund.
Each Reorganization is expected to be a tax-free reorganization for federal income tax purposes. Accordingly, no gain or loss is expected to be recognized by the Mutual Funds or Survivor Funds as a direct result of the Reorganizations. However, Mutual Fund shareholders may recognize a gain or loss upon receipt of cash in redemption of fractional shares of the Mutual Funds, which will occur prior to the Closing Date. In addition, shareholders whose Mutual Fund shares are not held in a brokerage account, or are held through a brokerage account that cannot accept shares of the Survivor Funds on the Closing Date, may recognize a gain or loss if their Mutual Fund shares are either liquidated or redeemed for cash, or transferred by their fiduciary intermediary to a different investment option.
At the Closing Date, Mutual Fund shareholders will receive shares of the corresponding Survivor Fund with an aggregate net asset value (“NAV”) equal to the NAV of the Mutual Fund shares they held immediately prior to the Reorganization. After distributing these shares, each Mutual Fund will cease operations and terminate as a series of the Trust. Shareholders may redeem their Mutual Fund shares at any time prior to the Closing Date, as set forth in the Mutual Funds’ prospectuses. However, no redemptions will be permitted after March 26, 2026. Such redemptions may be taxable transactions.
Completion of each Reorganization is subject to a number of conditions. Shareholders of each Mutual Fund will be mailed mid-February 2026, a prospectus/information statement describing in detail the Reorganization, the corresponding Survivor Fund, and a summary of the Board’s considerations in approving the Reorganization. Before the Closing Date, each class of shares of a Mutual Fund, other than Institutional Class Shares, will be consolidated into Institutional Class Shares (the “Share Class Consolidation”). The Share Class Consolidation will be effected on the basis of the relative NAVs of the relevant classes, without the imposition of any sales load, fee or other charge. The Share Class Consolidation is intended to move shareholders into a single share class of the Survivor Fund that most closely resembles the corresponding Mutual Fund’s Institutional Class Shares.
After the Share Class Consolidation, any fractional shares held by shareholders will be redeemed, and the Mutual Funds will distribute the redemption proceeds attributable to the redemption of fractional shares to those shareholders. The distribution of redemption proceeds to shareholders may be a taxable event and shareholders are encouraged to consult their tax advisors to determine the effect of any such redemption.
In order to receive shares of a Survivor Fund as part of the Reorganization, Mutual Fund shareholders must hold their shares of through a brokerage account that can accept shares of an ETF. If shareholders do not hold their shares of a Mutual Fund through that type of brokerage account, their Mutual Fund shares will be liquidated or redeemed for cash with the proceeds sent to the shareholder if not moved to an appropriate brokerage account. For shareholders that do not currently hold their shares of a Mutual Fund through a brokerage account that can hold shares of an ETF, information will be provided regarding additional actions that those shareholders must take in order to receive shares of an ETF as part of the Reorganization. No further action is required for shareholders that hold shares of a Mutual Fund through a brokerage account that can hold shares of an ETF.
Because the Survivor Funds are ETFs, their shares trade differently than Mutual Fund shares. Unlike the Mutual Funds, individual shares of the Survivor Funds are not purchased or redeemed directly with the Survivor Funds at NAV. Rather, shareholders will buy and sell shares of the Survivor Funds only in secondary market transactions on a stock exchange. Shares will trade at market prices, which may be greater than, equal to, or less than NAV. In addition, unlike shares of the Mutual Funds, which can only be purchased or redeemed at the next determined NAV, Survivor Fund shares can be purchased and sold throughout the trading day like shares of publicly traded companies, which gives shareholders the flexibility to enter into or exit out of their investment.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

The United States has been moving towards state capitalism recently.
Should the federal government be picking potential winners and losers?
Will this lead to optimal capital allocation?
Free-market proponents vociferously objected to government regulation and "interference" in the past.
Now, there is nary a whisper!
https://www.bloomberg.com/news/videos/2026-01-31/who-wins-when-washington-plays-favorites-video

Small Chicago-based Metropolitan Bank closed on Friday and will reopen as First Independence Bank (Detroit, MI) on Monday.
There is this note about brokered CDs in the FDIC FAQs,
"What Happens with My Brokered Deposits?
Substantially all the deposits, excluding the Cede & Co deposits, have been assumed by First Independence Bank. If you are a customer who has a Metropolitan Capital Bank & Trust deposit through a broker, you must contact your broker with any questions."
Edit/Add. Cede is a 3rd party recordkeeper of brokered CD & securities. FDIC insurance (SIPC for securities) will apply individually in most cases
So, it's just a matter of time that FDIC gets the info from Cede about CDs that were within & beyond the insured limits.
FDIC https://www.fdic.gov/news/press-releases/2026/first-independence-bank-detroit-michigan-assumes-all-deposits-metropolitan
News https://www.morningstar.com/news/dow-jones/2026013010705/fdic-reports-first-us-bank-failure-of-2026
Metropolitan Bank https://www.metcapbank.com/
Cede & Co https://en.wikipedia.org/wiki/Cede_and_Company

"Rieder must have answered some questions incorrectly in yesterday's interview."
Mr. Rieder may now have the time to investigate recent events at BlackRock TCP Capital.
https://www.mutualfundobserver.com/discuss/discussion/65488/blackrock-bdc-slashes-nav#latest

"In late January, BlackRock TCP Capital—a business-development company somewhat akin
to a closed-end fund—reported that it would be slashing the net asset value of its shares
by 19% for the fourth quarter of 2025."
"The size of the write-down and the ensuing selloff of the BDC’s publicly traded shares
captured some private credit burning trees but missed the forest fire: financial leverage."
"BlackRock TCP Capital’s fourth quarter is a reminder that when leverage, borrower fragility,
and equity exposure intersect, the downside can be steep—well before presentations about
'defensive positioning' and 'asset‑backed resilience' have time to age."
https://www.morningstar.com/bonds/blackrock-tcp-capitals-tumble-was-more-than-just-private-credit-risk

First Eagle Investments has been owned by private-equity since 2015.
2015-25 Blackstone/BX and Corsair Capital
2025- Genstar Capital
So, the firm and its people have gotten used to private-equity ownership.
https://en.wikipedia.org/wiki/First_Eagle_Investments

PE firm Genstar Capital acquired First Eagle stakes held by Blackstone, Corsair, and their co-investors.
Key First Eagle employees reportedly rolled over a sizable part of their economic interests
into the new ownership structure. The firm remains privately owned.
Also, First Eagle will aquire Diamond Hill—a publicly traded investment manager—by Q3 2026.

AI says:
Tether purchases physical gold, totaling around 140 tons valued at roughly $24 billion, primarily using massive profits generated from its USDT stablecoin reserves, which are invested in U.S. Treasury bills. The company has been accumulating gold since 2020 to diversify its portfolio, buying directly from refiners and financial institutions.
Key sources of funds for Tether's gold acquisition include:
USDT Reserve Profits: As Tether's USDT stablecoin generates billions in interest from holding U.S. Treasuries, the company reinvests these profits into gold to diversify away from dollar-denominated assets.
Operating Revenue: With profits exceeding $10 billion annually, Tether uses its substantial cash flow to purchase gold, sometimes at a rate of 1 to 2 tons per week.
Tether Gold (XAUT) Backing: Some gold is acquired to back its own tokenized gold product, XAUT, which has a market capitalization over $2.6 billion.
Gold Mining Investments: Tether has also acquired stakes in gold royalty companies to generate cash flows that are converted into physical gold.
Tether, aiming to act as a "gold central bank," stores its gold in a high-security vault in Switzerland. "

Bespoke Investment Group:
Summary
° Most country ETFs are sitting on solid year-to-date returns.
° Here we take a look at a snapshot of more than forty country ETFs traded on US exchanges.
° The average year-to-date change of all these country ETFs is already above 7%, while eleven are already up 10%+ and three are up 20%+.
Read
As domestic equities have struggled to hang onto gains so far this year, most country ETFs are already sitting on solid year-to-date returns.
Below is a snapshot of more than forty country ETFs traded on US exchanges. The average year-to-date change of all these country ETFs is already above 7%, while eleven are already up 10%+ and three are up 20%+. Peru (EPU) is up the most at +25%, followed by Colombia (COLO) and South Korea (EWY) at just over 20%.
Note that all seven G7 country ETFs (highlighted in light blue) are up less than the overall YTD average, with Japan (EWJ) up the most of this small group at +4.8%. The US (SPY) ranks 2nd to last of the G7 with its 1.6% YTD gain in front of only France (EWQ) at 1.5%.
Three country ETFs are in the red so far this year: Vietnam (VNAM), Kuwait (KWT), and India (INDA).

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"M* reports that the fund's no-load share class gained 14.2% annualized during his tenure (through 01/26/2026)."
Not that it matters with such a spectacular record, but that figure doesn't take into account the 3% sales charge that was in effect at the time. That is, no investor got quite that rate of return, even by holding through the entire period. Though it was close (3% load amortized over decades is a pittance.)
In the 1980s and '90s Fidelity was a "low load" family, where most of its growth funds charged 3% on purchase (aside from its Destiny plans) and its growth and income funds charged 2% on purchase + 1% on redemption. The load on Contrafund was dropped on June 23, 2003.
"Jason Weiner is co-manager of the fund, which he has managed since November 2006. He also manages Fidelity funds. "
Is AI now writing M*'s manager data? This reads like a description of some other (non-Fidelity) fund Weiner manages. Otherwise, he'd also manage other Fidelity funds. Fidelity gives the identical bio on other funds saying that he's managed those funds also since 2006. See, e.g. the people page for FDCAX.
Here's a better description of the remaining fund managers, provided by Fidelity:

For years, Will has been working alongside Jason, Asher, and the entire Equity division, sharing how he manages the Contrafund franchise, his investment philosophy and approach, and best practices and key learnings over different market cycles.
Jason and Asher have a long history of discussing stocks and collaborating with Will and the broader team. Will has worked with Jason for 34 years and with Asher for 17 years. Jason served as assistant portfolio manager with Will on Contrafund from 1994 to 1996. Jason and Asher have been serving as co-portfolio managers for more than seven years on Fidelity Advisor Equity Growth Fund and Fidelity Growth Discovery Fund. Additionally, they have co-managed Fidelity Capital Appreciation Fund together for over six years. This partnership provides strong continuity across the Contrafund strategies and the team. Their investment philosophy is highly aligned to Will’s approach.

https://etf.wi.gov/boards/deferredcompensation/2025/06/05/dc10d5/direct