ERShares XOVR ETF Redefines Retail Access to Private Market Growth

Introduction to XOVR's Crossover Strategy

U.S. equities markets are experiencing a significant shift with the emergence of new investment vehicles designed to democratize access to previously exclusive asset classes. The ERShares Private-Public Crossover ETF (XOVR) exemplifies this trend, having relaunched on August 30, 2024, as the first ETF to offer retail investors exposure to companies in their pre-initial public offering (IPO) stage. This development marks a pivotal moment, traditionally reserved for venture capitalists, institutional investors, and insiders, and aims to provide everyday investors with a seat at the wealth creation table that often occurs before a company lists publicly.

The Event in Detail: A New Investment Paradigm

XOVR's strategic relaunch involved combining its proprietary Entrepreneur 30 Total Return Index (ER30TR) with selective private equity exposure. This hybrid structure is designed to capture growth opportunities across both public and private markets. A key illustration of this approach was XOVR's inclusion of Klarna shares prior to the company's IPO on September 10, 2025. Klarna's shares commenced trading at $52, above the IPO price of $40, raising $1.37 billion and valuing the company at nearly $20 billion, despite a valuation decline from its 2021 peak.

The ETF is structured to invest the majority of its assets (over 85%) in the ER30TR Index, which comprises 30 large-capitalization entrepreneurial U.S. stocks. The remaining portion, up to 15%, is strategically allocated to private equity securities. Current holdings showcase a blend of established public innovators such as NVIDIA Corp. (10.08%), AppLovin Corp. (5.86%), Meta Platforms Inc. (5.83%), and Oracle Corp. (4.18%), alongside notable private companies like SpaceX (6.95% via SPV exposure), Anduril, and Klarna (via privately-offered securities issued by Fika Holdings SPV QP LP). These allocations highlight the fund's commitment to early-stage growth across diverse sectors.

Analysis of Market Reaction and Performance

The market's reaction to XOVR's innovative structure and performance has been notable. Since its relaunch on August 30, 2024, through September 30, 2025, the ETF delivered a total return of +37.2% (with dividends reinvested). This performance significantly outpaced major benchmark indices over the same period:

• S&P 500: +20.1%
• Russell 1000 Growth: +28.9%
• Nasdaq 100: +26.9%
• Dow Jones Industrial Average: +13.7%

This substantial outperformance suggests strong investor appetite for regulated and liquid access to private market growth. The ability of XOVR to integrate pre-IPO companies within a publicly traded ETF framework represents a crucial innovation, addressing the trend of companies remaining private for longer periods, thereby shifting a significant portion of wealth creation to earlier, less accessible stages.

Broader Context and Implications

XOVR's success could significantly reshape the investment landscape. It signals a growing demand among retail investors for exposure to high-growth private companies, potentially influencing capital allocation trends and fostering further innovation in financial products focused on the private-to-public crossover space. This model could also offer a new avenue for private companies to attract capital and transition to public markets, potentially altering traditional IPO processes and timelines.

Regulatory changes by the U.S. Securities and Exchange Commission (SEC) have facilitated this expansion, including the removal of a 15% cap on private fund investments by registered closed-end funds and broader eligibility for certain funds. However, these developments also introduce critical considerations regarding systemic risks and investor protection.

Potential risks for retail investors in such hybrid structures include:

• Valuation Opacity: Private equity valuations can be complex and less transparent than public market valuations, potentially leading to inflated figures to maintain Net Asset Value (NAV) stability.
• Liquidity Mismatches: Private assets are inherently less liquid. While XOVR aims for daily liquidity, managing illiquid holdings within a liquid ETF structure presents challenges, and may force premature asset sales.
• Layered Fees: Investors in such funds, particularly if they invest in "fund of funds" structures, may incur multiple layers of management fees.
• Lack of Transparency: Less stringent disclosure requirements for private assets compared to public securities can limit investor visibility into underlying holdings and valuations, and may involve leverage or affiliated transactions not typically permitted in public funds.

Expert Commentary

Eva Ados, COO and Chief Investment Strategist at ERShares, emphasized the fund's mission:

"It's time retail investors finally get a seat at the IPO table. For too long, this dynamic stage of growth has been reserved for institutions and insiders only. With Klarna, XOVR demonstrated that the gap can be narrowed - offering everyday investors exposure at the same point insiders participate."

Joel Shulman, Founder and CIO of ERShares, highlighted the breakthrough nature of XOVR:

"XOVR is not just another ETF - it's a breakthrough. We anchor in the ER30TR Index to capture leading-edge public innovators, while our private equity allocation is designed to extend access to opportunities that retail investors have historically been shut out of. Much of today's wealth creation occurs before the opening bell ever rings. We believe XOVR helps break down that barrier and opens the door for everyday investors to participate in growth across the full cycle - private and public - all in one ETF, with daily liquidity."

Looking Ahead

The success and adoption rate of XOVR will be a critical indicator for the broader demand for private market exposure among retail investors. Should the ETF continue to attract significant assets and demonstrate consistent performance, it could inspire a wave of similar "crossover" funds from other asset managers, further normalizing private market access. This could lead to increased liquidity in certain segments of the private market, influencing private company valuations and fundraising strategies.

However, regulatory scrutiny will likely intensify regarding investor protection, valuation methodologies for private holdings, and overall market stability. The industry will closely watch how these hybrid structures manage the inherent illiquidity and valuation complexities of private assets within a daily-liquid ETF framework, balancing accessibility with prudence for the everyday investor.