ETFs are increasingly breaking down the wall between public and private markets. Asset managers are finding ways to “ETF-ize” private equity and pre-IPO holdings — giving retail investors liquid, fractional access to growth opportunities historically restricted to institutional and accredited buyers. As companies stay private longer, the most explosive growth phases of high-profile startups often occur off public exchanges.
Key Takeaways
- Crossover ETFs give retail investors fractional access to high-growth private companies using SEC 15% illiquid sleeves.
- Issuers leverage special purpose vehicles and synthetic swaps to gain exposure to late-stage unicorns like SpaceX.
- Daily ETF pricing creates potential NAV dislocations when valuing illiquid private assets during periods of volatility.
It’s a meaningful crack in the wall that has long separated public markets from private growth — but it comes with trade-offs that are easy to gloss over in all the excitement.
Structural Innovation: The Rise of Crossover Models
To deliver pre-IPO access within the exchange-traded framework, issuers are rolling out crossover strategies, interval-fund hybrids and active public-private ETFs. AI and aerospace have emerged as early proving grounds, given that late-stage private valuations in these sectors have run well ahead of traditional IPO timelines.
Direct Ownership
The most direct approach is the public-private crossover ETF. Open-end funds generally can hold no more than 15% of net assets in investments classified as illiquid under SEC liquidity rules. By keeping 85% or more of their portfolios in liquid public equities, issuers can devote the remaining sleeve to late-stage venture rounds or secondary market pre-IPO shares.
That’s the model behind the KraneShares Artificial Intelligence & Technology ETF (AGIX). AGIX made headlines in March 2025 as one of the first U.S.-listed ETFs to buy directly into a private company, taking a stake in Anthropic that has run in the 4–5% range of net assets as a direct shareholder. ERShares’ Private-Public Crossover ETF (XOVR) runs a similar playbook but relies more heavily on indirect structures, combining a large-cap public equity core with a private sleeve previously concentrated almost entirely in SpaceX, alongside smaller stakes in Anduril and prediction markets giant Kalshi, via special purpose vehicles.
Retail appetite for pre-IPO market leaders is also fueling asset growth in space-themed funds. Beyond XOVR’s position, the Procure Space ETF (UFO) and the Baron First Principles ETF (RONB) have seen surging asset growth by holding SpaceX alongside listed equities — with RONB holding a concentrated allocation that has periodically topped 30% of net assets. Benchmark providers are keeping pace with this shift; earlier this year, the VettaFi Space Index instituted a fast-track inclusion rule to rapidly add newly public space firms immediately following their IPOs.
