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Large mutual funds and passive index funds are increasing cash reserves and preparing to reduce exposure to existing large-cap stocks ahead of several expected blockbuster IPOs in 2026, including SpaceX, OpenAI, and Anthropic. Analysts say these mega public offerings could significantly impact major indexes such as the S&P 500 and Nasdaq 100.
According to Goldman Sachs managing director John Flood, passive funds may need to rebalance portfolios once newly listed companies are added to benchmark indexes. This process could force institutional investors to sell portions of current holdings in top U.S. stocks to make room for high-value IPOs entering the market.
Flood noted that before each of the four largest IPOs in recent decades, U.S. equity mutual funds boosted their cash balances in preparation for increased demand. Investors are now closely watching the IPO pipeline as companies like SpaceX reportedly target a valuation near $1.75 trillion, potentially making it one of the most valuable publicly traded companies in the United States.
OpenAI and Anthropic are also expected to pursue public listings in the near future. OpenAI has reportedly explored a valuation exceeding $1 trillion, while Anthropic is negotiating funding that could push its valuation close to the same level.
The Nasdaq 100 and S&P 500 recently introduced updated rules designed to accelerate the inclusion of newly public mega-cap companies into their indexes. Analysts believe these changes could quickly attract institutional capital into upcoming IPOs, improving liquidity and broadening shareholder participation.
Deutsche Bank analysts also highlighted strong retail investor participation, supported by large household cash balances accumulated since the pandemic. While benchmark inclusion can boost liquidity and stabilize trading volumes, experts caution that insider selling after IPO lockup periods could still pressure share prices.
Despite the attention surrounding these IPOs, Deutsche Bank estimates that even the largest expected offerings would represent only slightly more than 0.1% of the S&P 500’s total market capitalization.
