SpaceX’s Record IPO Plan Pushes Obscure ETF Into the Spotlight

(Bloomberg) -- A bid by individual investors to grab a sliver of SpaceX before it goes public has propelled a niche ETF into the spotlight, highlighting retail euphoria over Elon Musk’s business empire and the scramble for private-company exposure.

The ERShares Private-Public Crossover ETF (ticker XOVR) has taken in more than $470 million since Dec. 8 — more than half its total assets — as investors seek to get in on what could become the biggest initial public offering ever. 

The catalyst: A Bloomberg News report this month that Musk’s rocket company is targeting a 2026 listing that could raise more than $30 billion and value it at about $1.5 trillion. And this exchange-traded fund is drawing attention because it holds a small piece of SpaceX through a special-purpose vehicle, potentially making it the only US-listed ETF with exposure, according to an analysis of Bloomberg-compiled data by Bloomberg Intelligence’s Breanne Dougherty.

That has turned XOVR, launched in 2017, into a speculative wrapper for Musk Inc.

“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, especially for an exchange-traded fund. 

At that time, ERShares, the issuer of the ETF, had a total investment of over $20 million in SpaceX, representing 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 show, making it XOVR’s fourth-largest holding after Nvidia Corp., Meta Platforms Inc. and Maplebear Inc.

ERShares representatives didn’t respond to a request for comment on whether it plans to increase its SpaceX stake, how it values and marks the position or what will happen if and when the rocket company goes public.

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.”

--With assistance from Emily Graffeo.

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