The only ETF holding Space X is being heavily bought by American retail investors

On January 23, Bloomberg reported that an exchange-traded fund (ETF) named ERShares Private-Public Crossover ETF has attracted over $120 million in inflows since purchasing SpaceX shares last December, setting a record for the best inflow in the fund's seven-year history.Positioning in SpaceX, ERShares Transforms from Small Player to "Star" FundERShares is a small ETF company that previously operated an ETF focused on entrepreneurs (ENTR), but had seen little progress until they changed their strategy and stock code, incorporating a significant amount of SpaceX shares, which turned things around.According to media reports, on December 2, they significantly increased their holdings of SpaceX shares a week before the bidding, resetting the price higher, and investors immediately gained 37%.Joel Shulman, founder of the XOVR fund, stated that the fund holds SpaceX shares through a special purpose vehicle, with specific purchasing methods kept confidential. SpaceX currently represents the largest holding in the ETF, accounting for 8.1%. The fund's assets have grown to $250 million.As a private company, SpaceX's shares are difficult to trade on the public market. Major fund managers from BlackRock to Invesco are competing to provide investors with access to private markets through ETFs.As of now, XOVR is still the only U.S.-listed ETF holding SpaceX shares, making it an exclusive channel for retail investors to access this popular private company.Retail Investors Favor It, but Concerns ExistIn terms of inflow scale, XOVR is favored by retail investors. Shulman noted that the fund often receives small subscription orders of a few hundred dollars. Discussions about the fund have also appeared on social platforms like Reddit.However, independent ETF analyst Dave Nadig pointed out some potential issues with XOVR:If the fund's size grows rapidly but it cannot continue to purchase SpaceX shares, it may lead to the dilution of the actual SpaceX positions that investors receive.Due to the lack of liquidity in SpaceX shares, the fund may face risks of trading at a net asset value premium or discount.The U.S. Securities and Exchange Commission stipulates that the proportion of illiquid investments held by open-end funds is limited to 15% of net assets. This means that if SpaceX's stock price suddenly surges, XOVR may trigger compliance risks and be forced to sell shares. Conversely, if SpaceX encounters a crisis, determining its stock price will also become an issue.There are significant discrepancies in the SpaceX stock price offered by different channels. For example, the XOVR website shows the SpaceX stock price at $185, while the private equity trading platform Forge quotes it at $213. Any buyer of XOVR does not know at what price they are purchasing SpaceX shares unless they withdraw their portfolio the day after the purchaseHe stated that SpaceX lacks transparency and liquidity, while XOVR has issues such as opaque pricing policies, which are unique and tricky problems for this specific ETF, at least for now.However, Nadig also believes that although XOVR missed the opportunity to improve transparency, it can be salvaged by publishing formal, legally binding board pricing policies, making board meeting minutes and transaction details public, updating SpaceX pricing information daily with explanations, and establishing daily market prices for SpaceX shares through small-scale transactions.Additionally, earlier this month, Shulman mentioned that while XOVR's public stocks will undergo quarterly rebalancing, it will "timely" increase and adjust its private holdings:"SpaceX is a stock we hold for the long term. We will not change that, and in fact, we may further increase our holdings."