Key Takeaways
- • Ohio School Employees Retirement System (Ohio SERS) plans a comprehensive review of its portfolio to measure its full exposure to artificial intelligence, according to Pensions & Investments.
- • Pension funds are raising concerns about correlation risk and the risks of investing in new data center construction tied to AI.
- • Index providers are moving to fast-track mega-IPOs such as SpaceX and OpenAI into benchmarks, and Nasdaq has reportedly changed its rules to allow SpaceX (SPCX) into the Nasdaq-100 after 15 days of trading.
- • S&P has reportedly denied fast entry to mega-IPOs, citing its 12-month profitability requirement, which would exclude SpaceX, Anthropic and OpenAI.
- • Commentators disagree on whether fast-track inclusion reflects market reality or turns indexes into a vehicle for pushing unprofitable companies onto passive investors.
Summary
Ohio School Employees Retirement System, based in Columbus, is planning a comprehensive review of its portfolio to determine its full exposure to artificial intelligence, according to Pensions & Investments. The review follows concerns among other pension funds about correlation risk, meaning that AI-linked holdings across a portfolio may move together and amplify losses in a downturn. Pension investors are also weighing the pitfalls of investing in new data center construction, a capital-intensive segment of the AI build-out.
The pension review sits alongside a broader debate over how major index providers should handle mega-IPOs. According to publisher coverage of the same story, Nasdaq has adjusted its rules to allow Elon Musk's newly public SpaceX (SPCX) into its flagship Nasdaq-100 Index after 15 days of trading. Reports also indicate that SpaceX and OpenAI have pressed Nasdaq, S&P, and FTSE Russell to waive listing requirements. S&P, by contrast, is reported to have declined fast entry for SpaceX, Anthropic and OpenAI because its 12-month profitability requirement would exclude them. Other indexes are considering or have adopted special fast-track rules for giant IPOs that do not apply to smaller issuers.
The stakes for institutional investors are significant. Passive vehicles tracking these benchmarks would be required to buy large positions in newly listed companies, and for index fund investors, a SpaceX position may become the most volatile component of their holdings on an ongoing basis. Some market observers view fast-track inclusion as a reflection of market realities, while others warn it could turn indexes into a mechanism for offloading unprofitable startups onto pensions and index funds at elevated valuations.
The pension review sits alongside a broader debate over how major index providers should handle mega-IPOs. According to publisher coverage of the same story, Nasdaq has adjusted its rules to allow Elon Musk's newly public SpaceX (SPCX) into its flagship Nasdaq-100 Index after 15 days of trading. Reports also indicate that SpaceX and OpenAI have pressed Nasdaq, S&P, and FTSE Russell to waive listing requirements. S&P, by contrast, is reported to have declined fast entry for SpaceX, Anthropic and OpenAI because its 12-month profitability requirement would exclude them. Other indexes are considering or have adopted special fast-track rules for giant IPOs that do not apply to smaller issuers.
The stakes for institutional investors are significant. Passive vehicles tracking these benchmarks would be required to buy large positions in newly listed companies, and for index fund investors, a SpaceX position may become the most volatile component of their holdings on an ongoing basis. Some market observers view fast-track inclusion as a reflection of market realities, while others warn it could turn indexes into a mechanism for offloading unprofitable startups onto pensions and index funds at elevated valuations.
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