Have you heard about the ERShares Private Public Crossover ETF (XOVR)? As the name implies, it is a mix of private companies and public ones including a large weighting to SpaceX. There has been a lot of coverage of this fund, most notably by Jeff Ptak from Morningstar. There have been questions about not marking to market and whether the fund owns too much SpaceX in terms of regulatory limits and what they're going to do about that.
The RONB ETF also owns SpaceX but per the fund page, it owns less. The Destiny Tech 100 Fund (DXYZ) is a closed end fund whose largest holding is SpaceX along with a few others that are probably familiar. It currently trades at a 32% premium to its net asset value. The structure of closed end funds is that the share amount is fixed, unlike an ETF, so market pricing is heavily influenced by investors' supply and demand, more so that with ETFs.
Last week a new closed end fund started trading. Actually, it looks like the Fundrise Innovation Fund (VCX) has existed but is now available as a closed end fund in a brokerage account. It started trading last week at $31.50 and it closed regular trading today at $380 and is up another 10% after hours.
Grok estimated VCX' NAV to be $18.97-$20 as of March 19th. If accurate then the fund is trading at 1900% premium to NAV.
If you gotta have this exposure and it ends up going horribly wrong, like because you bought with a 1500% premium to NAV, you can sell right away. The point is there are ways to access this part of the market without locking up your money. Similar to Cliffwater, there are ways to get most of the effect without the hassles that go with illiquid products.
Bloomberg and the FT took runs at trying to understand why gold has sold off since the war started. There were some vague thoughts including the idea that gold was overbought coming into the war which kind of jibes with what we talked about, that the gold market might have priced something bad in already and then sold on the news. There was also a sentiment that people have been selling what they can.
There may be no explanation that will satisfy anyone who is curious or invested but a little bigger picture is the idea that we talk about a lot which is that no diversifier is guaranteed to work in every single event which is why it is so important to diversify your diversifiers. If an investor would consider 20% in gold for times when things hit the fan, why not take that 20% and split between several different diversifiers in case gold, or something else, doesn't work out. If they all work, great. It's not impossible that none would work but that is a very remote possibility.
Bespoke mentioned the large declines in some of the larger tech stocks.
Seems like a good time to check in on some of the crazy high yielding derivative income fund that we look at every so often. A lot images coming.
Microsoft isn't as volatile as some of the others so it is interesting how closely the total return of MSFO tracks to the common.
Google is a touch more volatile than Microsoft and the total return of GOOY is pretty far from the common, more than I would have guessed.
Nvidia is more volatile still and again the total return of the YieldMax equivalent is pretty far from the common which we've seen before.
With all of these, there is path dependency risk. It hasn't been much of a problem for MSFO up to this point but has been for the other two.
We've looked at ways to use these where small slices can add meaningfully to a portfolio's yield without being a hideous drag on returns like yellow lines in the above charts.
The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.
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