SpaceX’s record IPO plan pushes obscure fund into spotlight

“This surge is likely linked to SpaceX stating a 2026 IPO target,” BI’s Dougherty and Charles Bond wrote. “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 ETF gained exposure to the Musk-led company via a special purpose vehicle in December 2024, offering rare access to the private company.

At that time, ERShares had a total investment of over $20 million in SpaceX, which represented roughly 12% of the ETF’s assets, according to a press release.

SpaceX was XOVR’s first private holding after the fund firm changed its name in August 2024 and added private entities to its investing mandate, which also includes public entrepreneurial ventures. However, as money rolled into the fund, the SpaceX holding shrunk to about 4% of its assets, data compiled by Bloomberg shows, making it XOVR’s fourth-largest holding after Nvidia Corp., Meta Platforms Inc. and Maplebear Inc.

Joel Shulman, founder and chief investment officer of ERShares, said the team is actively exploring opportunities to increase exposure to these investments. He acknowledges that rapid growth in any fund “naturally dilutes any positions that are, by their nature, more difficult to increase quickly, such as a private asset investment.” He also notes that any fair value assessment will be conducted in accordance with the requirements of the Investment Company Act of 1940 and generally accepted accounting principles.

To Jeffrey Ptak, a managing director at Morningstar, the SpaceX position has become such a small part of the portfolio that even if the issuer marks it higher — as many investors expect — the effect on overall performance would be marginal. Since the holding isn’t changing while the fund continues to attract cash, most of that inflow is likely being allocated to publicly traded stocks, further diluting SpaceX’s share of the portfolio, he said.

The ETF values its existing stake at $185 per share, far below recent secondary-market prices, says Dave Nadig, president and director of research at ETF.com. That low valuation keeps the position artificially small, which previously helped the ETF stay under concentration limits. Now, however, it can’t add to the position without revising that marked price.

So if SpaceX went public at around $420, the set per-share price from a secondary offering this month, the fund’s stake would see a significant pop. Marking the position to market would lift its net asset value — the per-share value of the fund — by roughly 4%, according to Nadig.

Even so, investors wouldn’t necessarily capture that full gain, he said, because anyone who bought the ETF as it surged recently risks seeing much of the boost erased as sellers emerge after the IPO.

“This is all a very long way of saying: there is no free lunch,” Nadig said. “The more this looks like ‘free money’ the less likely it actually will be.”

While proponents have insisted that ETFs can hold everything and anything, Morningstar’s Ptak says some assets may be best left out.

“It’s incongruous to hold these kinds of instruments in a daily liquidity vehicle like an ETF,” he said. “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.”