Most investors are familiar with exchange-traded funds, or ETFs, as tools for gaining exposure to stocks, fixed income, commodities and cryptocurrencies. The structure has also expanded to include more complex derivatives such as options, swaps and futures.
What many investors may not realize is that under SEC Rule 22e-4, ETFs are permitted to allocate up to 15% of their net assets to illiquid securities. “Illiquid securities are defined as those that cannot be reasonably sold within seven days without materially impacting price,” says Derek Yan, senior investment strategist at KraneShares.
[Sign up for stock news with our Invested newsletter.]
In theory, this allows ETFs to bridge the gap between public and private markets. Proponents often frame this as a way to “democratize” private equity, giving retail investors access to high-growth opportunities and exposures that were previously difficult to reach.
“Private market assets under management are projected to continue expanding through the end of the decade as institutional and retail allocators alike look to diversify,” says Coulter Regal, product manager at VanEck. “The publicly listed managers at the center of that trend stand to benefit from the secular tailwind of capital formation in private markets.”
In practice, however, this has not always worked smoothly. An example covered by ETF.com in February involved the ERShares Private-Public Crossover ETF (ticker: XOVR). The ETF uses a hybrid structure, holding mostly publicly traded technology stocks while also maintaining private exposure to SpaceX through a special-purpose vehicle, or SPV.
As of May 1, XOVR’s SpaceX SPV allocation stood at 22.3% of assets, exceeding the 15% guideline under Rule 22e-4. The report from ETF.com noted that the allocation had at one point reached as high as 45%, more than three times the allowable limit.
The reason came down to how ETF mechanics interact with illiquid assets. Under normal circumstances, ETF inflows and outflows are handled through an in-kind creation and redemption process, allowing managers to scale holdings without triggering capital gains.
When XOVR first announced its SpaceX exposure, the ETFs attracted significant inflows, pushing assets to a peak of $1.8 billion. At the time, inflows were directed primarily into liquid public equities, temporarily diluting the private allocation, which XOVR then had to buy and catch up.
When sentiment later reversed and roughly $627 million in outflows occurred, the fund had to sell its liquid holdings to meet these while the illiquid SpaceX SPV stake remained largely unchanged, causing its weight to rise sharply.
XOVR’s situation highlights several risks investors need to consider with private equity ETFs. Liquidity mismatches between daily-traded ETF shares and underlying private assets can lead to unexpected portfolio allocation shifts. The use of SPVs can result in opacity, while fees and bid-ask spreads also tend to be higher than traditional ETFs.
With that in mind, here are six of the best ETFs for private equity exposure in 2026:
| ETF | Expense Ratio |
| Baron First Principles ETF (RONB) | 1.00% |
| KraneShares Artificial Intelligence & Technology ETF (AGIX) | 0.99% |
| Tema Space Innovators ETF (NASA) | 0.87% |
| Invesco Global Listed Private Equity ETF (PSP) | 1.80% |
| VanEck Alternative Asset Manager ETF (GPZ) | 0.40% |
| Tema Alternative Asset Managers ETF (AAUM) | 0.75% |
Baron First Principles ETF (RONB)
RONB follows an actively managed growth strategy. The fund prioritizes companies from any market cap with durable competitive advantages and strong leadership teams. While the portfolio is primarily focused on U.S. equities, it has the flexibility to use leverage of up to one-third of its assets on an opportunistic basis. This adds another layer of return potential, but also increases risk.
The most notable feature of RONB is its direct exposure to SpaceX. The ETF holds about 4.1% in Class C shares and 3.7% in Class A shares. Unlike XOVR, this exposure is not achieved through an SPV, but through direct equity holdings. The fund currently manages about $238 million in assets and charges a relatively high 1% expense ratio, but remains fairly liquid with a low 0.09% 30-day median bid-ask spread.
KraneShares Artificial Intelligence & Technology ETF (AGIX)
“Some ETFs utilize SPVs to access private securities; however, we believe direct ownership may offer advantages in transparency, fee efficiency and alignment with underlying valuation,” Yan says. “AGIX appears directly on the capitalization table of private issuers rather than investing through intermediary structures like SPVs, meaning the ETF is registered as an actual shareholder.”
The bulk of AGIX’s portfolio tracks a raft of global technology stocks represented by the Solactive Etna Artificial General Intelligence Index. What sets it apart is its direct allocation to private firms, including about 2.7% in Anthropic, 1.6% in SpaceX and 1% in Nuro Inc. However, liquidity is poorer thanks to a wider 0.24% 30-day median bid-ask spread, and the ETF charges a high 0.99% expense ratio.
Tema Space Innovators ETF (NASA)
“NASA is actively managed and holds over 85% of its assets in publicly listed companies innovating and operating in the space economy,” explains Yuri Khodjamirian, chief investment officer at Tema ETFs. “NASA is also the lowest-cost ETF to offer private equity exposure of any kind.” At a 0.87% net expense ratio, investors currently get an ample 11.8% exposure to SpaceX through an SPV.
The rest of NASA’s portfolio spans the publicly investable space ecosystem. For example, Rocket Lab Corp. (RKLB) provides orbital launch capabilities, while AST SpaceMobile Inc. (ASTS) is developing a space-based cellular broadband network designed to connect directly to standard mobile phones. The ETF has seen strong growth since its launch at the end of March, now sitting at $291 million in assets.
Invesco Global Listed Private Equity ETF (PSP)
Investors who are not comfortable with higher fees and lower liquidity can take an indirect approach. One option is ETFs that invest in publicly traded private equity firms or business development companies. These companies either manage private equity funds or lend to middle-market private businesses. This structure offers exposure to private markets without holding illiquid assets directly.
“PSP tracks the Red Rocks Globally Listed Private Equity Index, which invests in 40 to 75 listed private equity companies,” says Rene Reyna, head of thematic and specialty product strategy at Invesco. “The common business interest of these companies is the buying and selling of others — while the companies in PSP are publicly listed and traded, they in turn own over 1,000 private businesses.”
VanEck Alternative Asset Manager ETF (GPZ)
“Private equity managers experienced a notable stretch of volatility in recent months, pressured by concerns around AI-driven disruption within their software portfolio companies and redemption gating at several non-traded fund vehicles,” Regal says. “Many of these stocks remain down year to date, but the group has seen a meaningful bounce off its March lows.” For exposure, VanEck offers GPZ.
This ETF tracks the MarketVector Alternative Asset Managers Index. In addition to private equity firms, the portfolio includes companies involved in venture capital, private credit, private real estate and private infrastructure. Top holdings include Blackstone Inc. (BX), Brookfield Corp. (BN), KKR & Co. Inc. (KKR) and Apollo Global Management Inc. (APO). GPZ charges a reasonable 0.4% expense ratio.
Tema Alternative Asset Managers ETF (AAUM)
“AAUM invests in listed private asset managers across equity, venture capital, credit, real estate and infrastructure,” Khodjamirian explains. “This ETF captures the growth of the alternatives asset class, but more importantly discriminates between different firms.” The ETF is actively managed by Kaimon Chung, a chartered financial analyst who previously worked at Evercore, Nomura and Oppenheimer.
Instead of being passively bound by an index benchmark like GPZ, AAUM’s strategy offers more discretion. “2026 has been a reminder of the risks in alternative managers, but we believe an active approach manages these risks and positions the portfolio around the most durable enterprises,” Khodjamirian says. However, the active management results in a higher 0.75% net expense ratio.
More from U.S. News
7 Best Private Credit ETFs to Buy in 2026
9 ETFs for Solid Alternative Assets
6 Best ETFs for Private Equity Exposure originally appeared on usnews.com
Update 05/04/26: This story was published at an earlier date and has been updated with new information.
