There is a quiet shift underway within the ETF universe where asset managers are increasingly relying on public funds to offer exposure to high-profile private corporations, with SpaceX emerging as a focal point amid renewed speculation about a potential IPO later this year.
Baron Capital's Baron First Principles ETF (NYSE:RONB) has garnered significant attention due to its allocation of around 14% of its portfolio to Elon Musk’s aerospace company, as noted by The Daily Upside. This development showcases the increasing efforts made by ETF issuers to bridge the gap between public markets and venture-style investing, an arena historically dominated by institutions and ultra-wealthy investors.
SpaceX Exposure Still Rare — But Growing
A small but growing group of funds is exploring similar strategies. The Entrepreneur Private-Public Crossover ETF (NASDAQ:XOVR) gained exposure via a special-purpose vehicle structure, while the Destiny Tech 100 ETF (NYSE:DXYZ), structured as a closed-end fund, reportedly holds a sizable stake as well, according to The Daily Upside.
Such allocations remain uncommon, but they highlight growing investor appetite for early exposure to marquee private companies, particularly in sectors such as space technology, AI infrastructure, and frontier innovation.
The Appeal Of Pre-IPO Positioning
For an investor, this is a simple equation: by getting access earlier, one can benefit from potential valuation appreciation before the broader market catches on to this liquidity pool. Of course, history has shown that early access has provided benefits to investors, but only until the company goes public.
However, if SpaceX moves forward with an IPO, thematic aerospace, innovation, and technology ETFs could eventually add the stock directly, potentially reducing the exclusivity that currently draws investors to crossover strategies.
Liquidity Questions Remain
Structural issues exist, nevertheless. For example, ETFs have regulatory constraints on holding illiquid assets. In some cases, classify private investments as "less liquid" rather than strictly illiquid to stay within regulatory thresholds. This approach has garnered debate about the need for valuation transparency.
For now, the rise of pre-IPO exposure in ETFs signals a broader evolution in the portfolio construction where the line between public and private investing is becoming increasingly blurred, even if the risks remain firmly in focus.
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