Good morning and happy Monday.
On a few occasions, SpaceX rockets have exploded. An ETF focused on the company is now facing its own kind of in-flight calamity.
The ERShares Private-Public Crossover ETF (XOVR) rapidly saw $630 million in net outflows last Thursday, prompting the fund to sell a substantial proportion of its publicly traded holdings, Morningstar’s Jeffrey Ptak wrote in a post about the liquidity crunch. That left a higher percentage of the portfolio allocated to SpaceX (44%), which is noteworthy as the SEC’s limit on illiquid holdings is 15%. What happens next is a big question mark, as a situation of this magnitude hasn’t been seen before, Ptak noted. The fund could sit tight and hope the SEC is lenient, or it could try to sell some of its SpaceX holdings. Either way, the private company is expected to go public, possibly this year, and as ERShares CEO Joel Shulman reportedly told the Financial Times, the higher proportion of SpaceX in the ETF may be what investors are looking for.
BlackRock Ramps Up Risk in Its Target-Date Funds
The world’s largest asset manager wants workers to take a little more risk in their retirement accounts.
BlackRock is bumping up equity allocations in its lines of target-date funds to 99% for vintages up to 30 years from retirement dates, the company disclosed in regulatory filings on Wednesday. The funds, including those in the iShares LifePath ETF series, will also have higher equity allocations until the target dates, at which point they hit 40%, an amount unchanged from the products’ current glide path. The adjustments, which amount to roughly a 6 percentage-point increase, are set to take effect in June and will make BlackRock’s target-date funds among the most aggressive in the business.
The change follows recent research from the company, which found that longevity is increasing in the US, and that people earn steady incomes for longer than they might have in the past. “We believe they can afford to take modestly more financial risk later in their careers, potentially resulting in greater wealth at retirement approximately 75% of the time,” according to a summary of the report.
A Big Small Change
It’s a seemingly minimal change that will have massive impacts, given the scale of the company’s business. BlackRock’s US target-date assets across mutual funds, ETFs and collective investment trusts represented about $611 billion as of the end of 2025, according to data from Sway Research. Only Vanguard, at nearly $1.8 trillion, and Fidelity with $693 billion, are bigger. BlackRock, which declined an interview, is the only firm offering target-date ETFs. Its line of iShares LifePath funds, which launched in 2023, represent about $400 million in assets.
Industrywide, target-date glide paths, or the asset allocation changes they make over time, have become increasingly equities-heavy. The products were scrutinized during the 2008 financial crisis, when many investors near retirement were stung by losses they didn’t anticipate. Some providers avoided increasing stock exposure in the aftermath, but target-date funds have widely become more aggressive in recent years:
- Target-date funds on average had about 92% allocation to equities in 2024, up from about 85% in 2015, per Morningstar’s most recent Target Date Landscape report.
- At the target date (which is designed to be near retirement), the average equity weighting was 45% in 2024, up from just over 40% in 2015.
- The changes happened as bond yields were less attractive in the 2010s and early 2020s. Meanwhile, more young workers have become invested in target-date funds through their 401(k) plans, and life expectancy has generally increased, the report noted.
Gonna Risk It? Ron Surz, president of Target Date Solutions and the designer of the glide path used by Hand Benefit & Trust’s target-date series, said BlackRock’s funds (along with most products on the market) take on too much risk in the 10 years before and after retirement. “BlackRock is moving in the wrong direction,” Surz said. The funds “are much riskier than the theory they say they follow at the target date. Getting even more risky is a bad move, even though BlackRock is not currently the riskiest.”
Wedbush Expands IVES Franchise With New Autocallable ETF
Now, IVES seen it all.
Wedbush Fund Advisers is following up its successful first exchange-traded fund launch with product features that are nearly as flashy as the namesake investment researcher’s wardrobe: artificial intelligence and autocallables. The firm’s nearly $1 billion Dan Ives Wedbush AI Revolution ETF (IVES) is getting a companion fund, the Dan Ives Wedbush AI Autocallable Income ETF. Wedbush, which currently has two funds on its product roster, filed last week for the forthcoming product.
“We’ve got some interesting [intellectual property] in the IVES persona and research that creates some opportunities for differentiated products,” Matthew Bromberg, chief operating officer and general counsel for Wedbush Fund Advisers, said, referring to the company’s overall direction rather than the forthcoming fund launch.
Don’t Autocall Us, We’ll Autocall You
The ETF will use total return swaps and other instruments that provide exposure to an autocallable index. Autocallables are market-linked instruments that pay income via regular coupons and principal at maturity, depending on the performance of an index. In this case, that’s the Solactive Wedbush AI 30% VT 4% Decrement Index, which gives volatility adjusted exposure to the Solactive Wedbush Artificial Intelligence Index. And that latter index includes stocks that are in the Dan Ives AI 30 Research Report. Phew.
The IVES ETF, which launched last June, has dropped over 7% so far this year, though it gained 16% in the past 12 months. The fund’s focus on AI, along with Dan Ives’ fame, helped make it one of the fastest-growing ETFs last year. Separately, autocallable ETFs are growing rapidly as a category:
- Among at least 10 US products whose names include autocallable, there is a total of about $1 billion in assets, per data from Morningstar Direct.
- Calamos, which last year launched the first autocallable ETFs, has the biggest footprint in the space. Its $761 million US Equity Autocallable Income ETF and the $114 million Nasdaq Autocallable Income ETF are the largest funds.
- GraniteShares is taking a different approach with the two funds it launched in February that are focused on individual companies: Tesla and Nvidia.
Don’t Label Us: Wedbush, which recently launched its second ETF, the ReturnOnLeadership US Large-Cap ETF (EXEQ), is not planning to “overdo it” on Dan Ives-branded products, Bromberg said, noting that the firm has numerous other analysts on its research team. It also isn’t planning to be a white-label ETF shop for other firms, though it may partner with subadvisors and others, he said. “We want to earn our place. We want to find truly differentiated products that meet investor demand, and we hope more often than not, we’ll get it right.”