Investors Flock to Niche ETF Ahead of SpaceX’s Historic IPO

A surge of interest from individual investors in advance of SpaceX’s anticipated initial public offering (IPO) has led to a significant influx of capital into a niche exchange-traded fund (ETF). The ERShares Private-Public Crossover ETF (ticker XOVR) has attracted over $470 million since December 8, 2024, representing more than half of its total assets. This rush reflects the growing excitement surrounding Elon Musk‘s ventures and the desire for retail investors to access equity in private companies.

The catalyst for this investor enthusiasm was a report from Bloomberg News indicating that SpaceX aims to list publicly in 2026, with projections suggesting it could raise more than $30 billion and achieve a valuation of approximately $1.5 trillion. The ERShares ETF stands out as it offers exposure to SpaceX through a special-purpose vehicle, making it potentially the only U.S.-listed ETF to include shares of the private company, according to Breanne Dougherty from Bloomberg Intelligence.

Launched in 2017, the XOVR ETF has evolved into a speculative wrapper for Musk’s business empire. Dougherty and her colleague Charles Bond noted, “Just the hint of a SpaceX IPO — now lightly penciled in for late 2026 — hit the trifecta of investor obsessions: breakthrough innovation, a privately held startup valued at over $10 billion, and a revived IPO pulse.”

The fund gained access to SpaceX in December 2024, with an initial investment exceeding $20 million, which represented around 12 percent of the ETF’s assets at the time. SpaceX was the first private holding for ERShares after a strategic rebranding in August 2024, when the fund expanded its investment mandate to include both private and public entrepreneurial ventures.

As the fund grew, SpaceX’s share decreased to approximately 4 percent of its assets, making it the fourth-largest holding behind prominent companies like Nvidia Corp., Meta Platforms Inc., and Maplebear Inc..

Joel Shulman, founder and chief investment officer of ERShares, acknowledged the challenges of maintaining significant positions in private assets amid rapid fund growth. He stated that any fair value assessment would adhere to the requirements of the Investment Company Act of 1940 and generally accepted accounting principles.

Despite the diminishing proportion of SpaceX in the ETF, Jeffrey Ptak, a managing director at Morningstar Inc., commented on the potential impact of the SpaceX position on the overall portfolio. He noted that the current holding has become so minor that any increase in value would have a negligible effect on performance. Most new cash inflows are likely being allocated to publicly traded stocks, further diluting SpaceX’s representation in the ETF.

The ETF currently values its stake in SpaceX at $185 per share, which is significantly lower than recent secondary-market prices. Dave Nadig, president of ETF.com, highlighted that this low valuation keeps the position artificially small and limits the ability to increase it without adjusting its marked price. Should SpaceX go public at around $420, as indicated in a recent secondary offering, the ETF’s net asset value could increase by roughly 4 percent.

Nonetheless, investors may not benefit fully from this potential gain, as those who have recently invested in the ETF could see their profits diminished if selling pressure arises after the IPO. Nadig emphasized, “There is no free lunch,” warning that the perception of easy profits is often misleading.

While many proponents argue that ETFs can encompass diverse asset classes, Ptak cautioned that some private investments may be better suited outside of a daily liquidity structure like an ETF. He stated, “It is rife with confusion, which you’re seeing writ large right now, with people diving into XOVR in the belief they’ll see some huge payoff from SpaceX.”

The interplay between retail investor enthusiasm and the complexities of private equity investments continues to shape the narrative surrounding SpaceX’s forthcoming IPO and its impact on related investment vehicles.