## [# SpaceX Stake Propels Baron ETF to Record Private Market Exposure](/sections/features/spacex-stake-propels-baron-etf-record-private-market-exposure)
# SpaceX Stake Propels Baron ETF to Record Private Market Exposure
A concentrated stake in SpaceX has propelled the RONB into uncharted territory for private exposure inside an ETF.
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[By Sumit Roy ](/authors/sumit-roy)
Jan 23, 2026
Edited by: ETF.com Staff
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The [**Baron First Principles ETF (RONB)**](/ronb) has quickly become the U.S.-listed ETF with the largest exposure to private companies, a development that is drawing both investor interest and industry scrutiny.
First highlighted by Bloomberg’s Senior ETF Analyst Eric Balchunas, the actively managed ETF currently allocates 21.5% of its portfolio to SpaceX, according to the issuer’s website. That stake is supplemented by a 5.4% position in xAI, bringing the fund’s total private market exposure to nearly 27%.
RONB launched a little over a month ago and is managed by legendary growth investor Ron Baron, alongside his sons Michael and David Baron. The fund follows a fundamental, high-conviction strategy focused on companies with durable competitive advantages, strong management teams, and long-term growth potential.
Despite its short track record, the ETF has already amassed about $93 million in assets under management. RONB is one of five ETFs launched last month by Baron Capital, the $44 billion mutual fund manager, and is widely viewed as the flagship product of the new lineup.
## SpaceX Exposure as a Flows Catalyst
The sizable SpaceX position could prove a powerful draw for investors seeking access to high-profile private companies through a public market vehicle.
That dynamic was on display late last year when the [**ERShares Private-Public Crossover ETF (XOVR)**](/xovr) surged in popularity. XOVR quadrupled in size, from under $400 million to roughly $1.6 billion in assets, after investors piled into the fund for its SpaceX exposure amid reports that Elon Musk’s space company was targeting a potential IPO in 2026.
With exposure not only to SpaceX but also to xAI, RONB could experience a similar wave of inflows. Notably, the ETF also holds a 12% position in Tesla, meaning companies linked to Elon Musk collectively account for nearly 40% of the portfolio.
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## An Aggressive Liquidity Classification
RONB’s portfolio construction reflects an aggressive interpretation of ETF liquidity regulations.
Under current rules, open-end funds, including ETFs, are generally limited to allocating no more than 15% of assets to illiquid securities, defined as investments that cannot reasonably be sold within seven days without materially affecting their price.
RONB exceeds that threshold by classifying its SpaceX stake as “less liquid,” rather than “illiquid,” based on the depth of secondary market trading in the shares.
“Normally, an ETF can only hold up to 15% in illiquid securities, but in the case of SpaceX, Baron considers it liquid since there is a healthy secondary market for the shares,” Balchunas wrote.
That classification has drawn pushback from some industry observers.
Conor MacWilliams, owner of Outer Beach Consultants, warned that the classification could set an uncomfortable precedent. “This is a really bad precedent,” he said. “Apparently Ron considers SpaceX to be a Level 2 asset for liquidity purposes. That flies in the face of a lot of existing cornerstones of private markets treatment in ETFs. Someone needs to get the SEC to sign off on this.”
## Risks Investors Should Understand
While private company exposure may be appealing, including large private positions inside a liquid ETF introduces risks that investors may not fully appreciate.
One is valuation opacity. Unlike public stocks, private companies do not trade continuously, meaning their values are determined using fair value estimates that may lag real world transactions. As a result, investors buying or selling ETF shares may not know precisely what price the private holdings are being carried at until after the fact.
Another is flow-driven dilution. If the fund experiences rapid inflows, managers may not be able to scale private positions immediately. New capital could flow into public holdings instead, reducing the ETF’s effective private exposure.
Conversely, during periods of heavy redemptions, the portfolio could become more concentrated in private assets as liquid public holdings are used to meet outflows. That concentration effect can amplify the impact of any subsequent valuation adjustments to the private holdings.
## Looking Ahead
ETFs are increasingly experimenting with allocations to private companies as a way to differentiate products and attract investor attention. RONB takes that trend further than any ETF to date.
Whether the strategy proves durable remains to be seen. Much may depend on how the fund manages flows, valuations, and concentration as assets grow, and on how regulators ultimately view the expanding role of private companies in the ETF structure.
With speculation around a SpaceX IPO continuing to build, RONB will be closely watched as a real-time test case for how far ETFs can push into private markets without breaking investor expectations around transparency and liquidity.
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[ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy)
Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including… [View Bio](/authors/sumit-roy)
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