A wave of retail investor enthusiasm for Elon Musk's SpaceX, ahead of its potential blockbuster initial public offering, has catapulted a little-known exchange-traded fund into the financial spotlight. The ERShares Private-Public Crossover ETF (ticker XOVR) has seen a staggering influx of more than US$470 million since December 8, as individuals scramble for a piece of the private rocket company.
The SpaceX Catalyst and ETF Mechanics
The driving force behind this surge is a Bloomberg News report from December 2025 indicating that SpaceX is targeting a 2026 public listing. This IPO could potentially raise over US$30 billion and value the company at a staggering approximately US$1.5 trillion, positioning it to be one of the largest ever.
XOVR has become a focal point because, according to an analysis by Bloomberg Intelligence's Breanne Dougherty, it appears to be the only U.S.-listed ETF with direct exposure to SpaceX. This access is achieved through a special-purpose vehicle. The fund first gained exposure to the Musk-led company in December 2024, following a change in its mandate that August to include private entrepreneurial ventures alongside public ones.
Rapid Growth and Inevitable Dilution
When ERShares initially invested, its stake in SpaceX was valued at over US$20 million, representing roughly 12% of the ETF's total assets. However, the massive inflow of new investor capital has dramatically diluted this position. Data shows the SpaceX holding has shrunk to about 4% of the fund's assets, making it the fourth-largest holding behind giants like Nvidia Corp., Meta Platforms Inc., and Maplebear Inc.
Joel Shulman, founder and CIO of ERShares, acknowledged this dynamic, stating that rapid fund growth "naturally dilutes any positions that are, by their nature, more difficult to increase quickly, such as a private asset investment." He confirmed the firm is exploring ways to increase exposure and that valuations are conducted in compliance with the Investment Company Act of 1940 and standard accounting principles.
Analyst Caution Amidst the Euphoria
The stratospheric rise of XOVR has not gone unnoticed by market strategists, some of whom warn the vehicle may be "rife with confusion" for investors solely seeking SpaceX exposure. Morningstar Inc. managing director Jeffrey Ptak pointed out that with the SpaceX position now so small, even a significant upward revaluation of the private holding would have only a marginal effect on the overall ETF's performance.
Most of the new cash flowing in is likely being allocated to the fund's publicly traded stocks, further reducing SpaceX's portfolio weight. Bloomberg Intelligence analysts Breanne Dougherty and Charles Bond summarized the phenomenon, noting that the mere hint of a SpaceX IPO hit a "trifecta of investor obsessions: breakthrough innovation, a privately held startup valued at over US$10 billion and a revived IPO pulse."
This event underscores the powerful retail investor fascination with Elon Musk's empire and the intense, often complex, scramble for pre-IPO access to coveted private companies through public market instruments.
