XOVR ETF's 31% SpaceX IPO gain shows value of shareholder-first fund design

ERShares Private-Public Crossover ETF (XOVR) appreciated 30.71% from March 30 through June 15, with its SpaceX exposure generating more than $183 million in unrealized appreciation during the period surrounding the company's $2.1 trillion market debut. The fund's assets swelled to roughly $2.4 billion ahead of the IPO from about $400 million at the start of the year, as investors sought pre-IPO access to the rocket company.

"The SpaceX IPO period created a real-time example of why private-public crossover investing matters," said Joel Shulman, founder and chief investment officer at ERShares. "Many category-leading companies are creating significant value before they become broadly available in public markets."

SpaceX raised $75 billion in its June 12 Nasdaq debut, the largest IPO in history, with shares opening at $150 above the $135 IPO price and closing at $160.95. The listing valued the company at roughly $2.1 trillion and made founder Elon Musk the world's first trillionaire. XOVR, which held SpaceX through a special purpose vehicle, was among a handful of funds offering pre-IPO exposure alongside vehicles such as the ARK Venture Fund, which held a 17.96% SpaceX allocation, and the Baron First Principles ETF at 8.72%.

The episode highlights a structural shift in growth investing: companies are staying private longer, building significant value before public-market access becomes available. XOVR's structure — combining public equities with selective private exposure inside a daily-liquidity ETF wrapper — offers a template for capturing that value, though the 0.75% expense ratio and concentrated single-name risk demand careful allocation sizing.

Four Structural Innovations During the IPO

ERShares introduced four first-of-their-kind innovations around the SpaceX listing. In January, the firm converted XOVR's SpaceX exposure into a 0/0 special purpose vehicle with no management or performance fees at the SPV level, part of what it called a "Transparency Reset" initiative. It then established a first-of-its-kind liquidity arrangement that allowed the fund to increase its SpaceX weight to about 14% immediately before the IPO, up from roughly 13%.

Around the listing, ERShares implemented a shareholder protection plan that limited more than $1 billion in potential short-term event-driven creations, according to the firm. The plan also incorporated redemption and transaction fee economics designed to benefit remaining shareholders, together with a board-reviewed valuation framework. The measures followed a period in January when XOVR's assets surged from about $400 million to $1.8 billion, diluting the SpaceX weight from roughly 10% to less than 2%.

"We learned from that experience and we were not going to let that happen again," Shulman said. "We took steps designed to help protect existing shareholders and maintain meaningful SpaceX exposure going into the IPO."

Valuation Debate Persists

Despite the strong performance, SpaceX's valuation has drawn skepticism. Morningstar estimated the company's fair value at about $780 billion — less than half the IPO valuation. SpaceX generated roughly $19 billion in revenue but posted a $4.9 billion net loss in fiscal 2025 and has accumulated $41.3 billion in losses since its founding in 2002, according to its prospectus.

Historical IPO data suggests caution. Research covering more than 9,000 U.S. IPOs between 1975 and 2021 found that 60% were flat or lower three years after their first trading day, while only 16% more than doubled during that period, per a Yahoo Finance analysis.

For investors, the ETF approach mitigates some single-stock risk. XOVR's top public holdings include Nvidia at 10.31%, Meta Platforms at 5.24% and Instacart at 4.11%, providing diversification beyond SpaceX. The fund's 0.75% expense ratio compares with 1% for the Baron First Principles ETF and 2.9% for the ARK Venture Fund. Major index providers are also rolling out fast-entry rules that could bring SpaceX into broad-market ETFs such as the Invesco QQQ Trust and iShares Russell 1000 Growth ETF within weeks.

This article is for informational purposes only and does not constitute investment advice.