XOVR ETF: A Historical Lens on Private-Public Crossover Investing

The XOVR ETF represents a structural innovation in how investors can access the next wave of entrepreneurial growth. It is the first crossover vehicle designed to blend the liquidity of a public exchange-traded fund with the growth potential of private equity. The fund's core structure is built on the ER30TR Index, which provides a transparent, rules-based basket of 30 US large-cap entrepreneurial public stocks. This public equity foundation is then supplemented with a direct allocation to US large-cap private securities, creating a hybrid portfolio that sits at the intersection of two distinct markets.

The fund's recent relaunch in August 2024 marks a decisive shift from its previous active management strategy. The decision to replace the preponderance of its holdings with the ER30TR Index (85%+) was driven by performance and efficiency. The actively managed predecessor significantly underperformed its benchmark, and the new index-based approach aims to capture the entrepreneurial factor more consistently while reducing costly turnover. This transition provides a clearer, more cost-effective way for investors to gain exposure to a curated group of high-growth companies, including those that are already public but operate with a startup mindset.

This structure is particularly timely against the backdrop of a resurgent IPO market. Global IPO deal volume in Q3 2025 rose 19% year-over-year, with proceeds surging 89%. This recovery, led by the US, signals a renewed pipeline of companies ready to go public. The XOVR ETF offers a unique instrument for navigating this environment. It provides indirect, convenient exposure to some of the most valuable private companies-like SpaceX and OpenAI-through its private equity holdings, while also offering daily liquidity and transparent Net Asset Value (NAV) pricing. This is a critical advantage over traditional private equity funds, which are often illiquid and trade at unpredictable premiums or discounts.

The bottom line is that XOVR is a new kind of growth vehicle. It leverages the transparency and accessibility of an ETF to give investors a direct, albeit indirect, stake in the private-public crossover theme. In a market where the IPO pipeline is reactivating, the fund offers a streamlined way to participate in the growth of entrepreneurial leaders, both on and off the public exchanges.

Private Market Valuation: The AI Boom's Unprecedented Scale

The public market surge for companies like Rivian is a ripple in a much larger, more powerful current. The private market backdrop for AI is nothing short of a valuation explosion, creating a context where the crossover thesis for high-flying startups becomes not just plausible, but almost inevitable. The scale is staggering. In 2025, AI captured close to 50% of all global funding, with a total of $202.3 billion invested in the sector. This isn't just a trend; it's a structural shift, with AI funding more than doubling from the previous year.

At the apex of this private market frenzy are two titans whose valuations have entered the realm of pure speculation. SpaceX has authorized an insider share sale that values Elon Musk's company at about $800 billion. OpenAI is in talks to raise up to $100 billion in a funding round that could value the ChatGPT maker at up to $830 billion. These figures are not just large; they are historic. They represent a concentration of capital and ambition that dwarfs the scale of any previous tech boom. The implication is clear: the private market is already pricing in a future where AI is the dominant economic force, and the companies leading it command sovereign-like valuations.

This environment differs critically from the dot-com bubble of the late 1990s, a comparison that is frequently invoked but often misleading. The AI boom is built on a more robust foundation. As one analysis notes, the dotcom bubble is effectively the only compute wave to have an abrupt end, whereas AI is seen as a multi-year "wave" that requires investment across every layer of the tech stack. The fraud and accounting scandals that inflated the competitive capex environment of the internet era have been largely legislated out of existence since the Sarbanes-Oxley Act. Today's funding is more focused on larger, established companies and data center projects, which are less prone to the kind of speculative frenzy that characterized early internet startups.

That said, the risks are not absent; they are simply different. The primary concern is not fraud, but the sheer scale of debt-fueled investment. The analysis notes that broader sentiment around AI has recently cooled as investors start doubting whether the pace of debt-fueled investment by giants like Amazon, Microsoft, Oracle, and OpenAI itself can be maintained in the long run. The $300 billion-plus in hyperscaler capex commitments for 2025 is a staggering figure, and the production of chips is already facing supply constraints. This creates a potential for a funding crunch if the promised returns on this massive capital expenditure fail to materialize.

The bottom line is that the private market AI boom has created a new valuation benchmark. When a company like OpenAI approaches an $830 billion valuation, the logic for a public market crossover becomes compelling. It validates the narrative of AI as a generational wave, not a fleeting theme. For a company like Rivian, which is betting on its own in-house AI chip, the backdrop provides a powerful tailwind. The market is already paying for the future of AI. The question for investors is no longer whether AI will be important, but whether the specific companies executing on it can capture a meaningful share of this unprecedented capital flow before the inevitable reckoning with reality checks.

The Historical Analogy: Dot-Com Parallels and Key Differences

The current surge in AI and tech stocks inevitably invites a comparison to the dot-com bubble. The historical lens is useful, but the parallels are more superficial than structural. The Nasdaq's 600% surge from 1995-2000 followed by a 78% collapse from its peak is a stark warning. That era was defined by a speculative frenzy where valuations were decoupled from fundamentals, leading to the failure of countless startups and a brutal reckoning for investors.

Yet, the dynamics today are fundamentally different. The first key difference is the absence of a Y2K deadline. The switch to the year 2000 acted as a unique, non-negotiable catalyst that pulled forward massive IT spending and artificially inflated demand for internet infrastructure. This created a forced, artificial boom that had no natural endpoint. Today's AI wave lacks such a singular, external trigger. Its adoption is organic and multi-year, not a one-time event.

Second, the regulatory and financial landscape has hardened. The dot-com crash was fueled in part by fraud and lax audit standards, exemplified by the WorldCom accounting scandal that involved more than $11 billion in fraudulent activity. The subsequent Sarbanes-Oxley Act raised the bar for corporate governance and financial transparency. While fraud is not impossible, the structural safeguards that existed during the dot-com era are now in place, making a similar collapse of confidence less likely.

Most critically, the nature of the technological wave itself differs. The AI boom is not a fleeting theme but is viewed as a multi-year tech wave with economy-wide impact. As one analysis notes, waves like AI are defined by their impact across the whole economy, requiring investment across every layer of the tech stack. This is a sequential, foundational build-out, not a speculative sprint. The dot-com bubble was the only compute wave to end abruptly; previous waves like railroads or automobiles matured over decades. AI, by this definition, is building on the foundation of the internet and mobile waves, creating a more durable, interconnected infrastructure.

The bottom line is that while the current environment shares the high volatility and speculative fervor of the late 1990s, the underlying drivers are more robust. The AI wave is a structural shift, not a speculative bubble. The risk is not a sudden crash, but a prolonged period of consolidation where only companies with sound business models and the ability to generate cash will survive. The historical analogy serves as a caution against complacency, but it does not predict a repeat of the dot-com collapse. The investment challenge now is to distinguish between the durable infrastructure being built and the speculative froth that will inevitably burn off.

Investment Implications: Valuation, Liquidity, and Catalysts

The ETF's performance paints a picture of a fund capturing a specific, albeit selective, phase of the market's rebound. With a 12.74% year-to-date return and a rolling annual return of 8.005%, XOVR is moving in step with a broader market recovery. This suggests the fund's strategy of targeting high-growth, often pre-IPO companies is benefiting from the renewed investor appetite for innovation, particularly in AI. The stock's 2.069% daily volatility and 1.381% intraday amplitude reflect the inherent risk in this segment, where valuations are sensitive to sentiment shifts.

The primary risk, however, is structural and tied to the very definition of the fund's target universe. The global IPO market is undergoing a "flight to quality", where new issuers are demonstrating stronger profitability and resilient aftermarket performance. This trend directly challenges the core premise of an ETF focused on extreme private valuations. If the market's selectivity intensifies, only the most profitable and operationally sound companies will succeed in going public. This could leave the ETF's portfolio exposed to a cohort of companies that may never achieve public market validation, or whose path to profitability is longer and more capital-intensive than anticipated.

Near-term catalysts could validate or challenge this thesis. On the positive side, OpenAI's potential $100 billion fundraise would be a monumental event, potentially validating the extreme valuations of the most hyped AI companies. This could provide a powerful tailwind for the entire private tech ecosystem that XOVR targets. Conversely, SpaceX's insider share sale at an $800 billion valuation introduces a different kind of pressure. It represents a significant liquidity event for a private giant, which could signal a shift in how ultra-high-value private companies are being valued and monetized, potentially putting downward pressure on the private market multiples that the ETF's holdings rely on.

The bottom line is that XOVR's performance is a bet on a specific market dynamic: the continued flow of capital into high-growth, pre-IPO companies despite a backdrop of increasing investor selectivity. The fund is capturing the rebound, but its long-term risk profile hinges on whether the "flight to quality" in IPOs accelerates faster than the private market can generate new, investable companies with credible paths to public success. The near-term catalysts will test this delicate balance.