The sponsor of the ERShares Private-Public Crossover ETF (XOVR) on Monday detailed how the fund handled SpaceX's highly anticipated IPO, framing the experience as a real-world test of its private-public crossover investing strategy.

ERShares said XOVR was built to give investors exposure to high-growth private companies before they hit public markets, using what it calls a "VC Lens" across both private and public investments. The SpaceX listing, they argued, highlights a broader trend: category-leading companies staying private longer and creating massive value before public investors can get in.

Key Developments

ERShares noted that many fast-growing companies are staying private longer, building substantial value before public investors can access them. XOVR aims to bridge that gap by combining public equities with selective private-market exposure.

The fund's approach was shaped by lessons from earlier this year, when a surge of investor interest tied to SpaceX caused XOVR's assets to jump from roughly $400 million to $1.8 billion. As new money poured in, the fund's SpaceX allocation was diluted from about 10% to less than 2%.

In response, ERShares launched what it called a "Transparency Reset," converting the fund's SpaceX holdings into a 0/0 special purpose vehicle (SPV) structure that carries no management or performance fees at the SPV level.

Ahead of the SpaceX IPO, ERShares also implemented a first-of-its-kind liquidity arrangement that allowed the ETF to increase its SpaceX exposure while staying compliant with ETF regulations. According to the firm, these changes helped maintain a SpaceX weighting of about 13% to 14% even as XOVR's assets expanded to roughly $2.4 billion.

To prevent another round of dilution, ERShares introduced a Shareholder Protection Plan before the IPO. The firm estimates that the plan blocked more than $1 billion of short-term, event-driven inflows from investors seeking temporary exposure to SpaceX through XOVR. The measures included creation controls, transaction-fee mechanisms, and valuation procedures designed to preserve the IPO's benefits for long-term shareholders.

ERShares said the strategy paid off: XOVR's SpaceX position generated more than $183 million in unrealized appreciation and contributed to a 30.71% gain in the ETF between March 30 and June 15.

The company said the experience demonstrated how a venture-capital-style investment approach can be applied within an ETF structure to capture opportunities across both private and public markets.