Strategic Access to SpaceX: Analyzing Private Equity ETFs

With SpaceX expected to launch an initial public offering this summer, retail investors are seeking alternative ways to gain exposure to the aerospace giant before it hits public exchanges. The company is projected to reach a valuation between $1.75 trillion and $2 trillion upon going public, making it one of the most anticipated listings in history. Because direct shares remain unavailable to the general public, certain exchange-traded funds (ETFs) have emerged as proxies. These funds allow investors to tap into private markets, though they bring operational complexities and risks that differ from traditional equity funds. The ERShares Private-Public Crossover ETF (XOVR) currently holds a 28% allocation to SpaceX through a special-purpose vehicle (SPV). This high concentration is partly a result of the fund selling off its public holdings to meet redemption requests, as the underlying private equity cannot be liquidated as quickly. Alternatively, the Baron First Principles ETF (RONB) holds direct Class A and Class C shares of SpaceX, representing 8% of its portfolio. Managed by veteran growth investor Ron Baron, the fund is non-diversified with fewer than 30 holdings, primarily concentrated in consumer discretionary and financials. While these ETFs provide a bridge to private markets, they carry inherent liquidity risks. The disparity between the daily tradability of the ETF shares and the illiquidity of the underlying private assets can lead to volatility or redemption challenges, mirroring recent stresses seen in the broader private credit market.