Following Donald Trump’s election victory, major indices like the Dow Jones and S&P 500 reached record highs. This move certainly makes sense, considering Mr. Trump’s widely-publicized pro-business stance and his expected policies which will include tax cuts for corporations and individuals, as well as other economic ideas which should bolster growth. These higher growth and inflation expectations are starting to get priced into the bond market, though we’ve seen some volatility in the latter half of this week. But for investors looking to capitalize on this potential growth, the question is where to invest.

One intriguing exchange traded fund (ETF) I just came across is the Destiny Tech100 (NYSE:DXYZ). This particular fund is aimed at investors looking for access to the top 100 high-growth tech companies. In other words, for those looking to move up the risk spectrum and achieve maximum leverage to the growth we could see over the next four years, this is a top ETF that’s growing in popularity of late. 

Since the fund was brought to the market in March of this year, it’s up more than 280%. Notably, over the past day, DXYZ is up more than 40%, so it’s clear that companies in the higher-growth areas of the market are seeing plenty of love from investors right now.

Let’s dive into whether DXYZ can indeed hit new all-time highs – its previous high was $105 per share set briefly after its launch, and shares of this ETF now trade around $32 per share at the time of writing. Such a move would imply a tripling from current levels, so that would be a meaningful move, even for this ETF.

Key Points About This Article:

• The Destiny Tech100 ETF is certainly among the more compelling options in the market right now, given its leverage toward hyper-growth stocks.
• Let’s dive into what companies this fund holds, and why it’s absolutely skyrocketing following a Donald Trump presidential victory.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

What Is the Destiny Tech100 ETF?

Destiny Tech100 is a closed-end management investment company that began trading on the New York Stock Exchange on March 26, 2024. The aim of this particular ETF is to allow investors an opportunity to participate in a portfolio of 100 leading private technology companies, including notable names like SpaceX, OpenAI, and Discord. In other words, these aren’t publicly-traded tech companies (yet). They’re still private, but each of the top 100 holdings in this fund are noted to be at “a level of maturity and stability expected of a late-stage venture-backed company.” Makes sense. 

Having the ability to participate in the growth of companies like SpaceX (in particular) is clearly what investors are after with a fund like this. Elon Musk appears to have positioned himself as the rainmaker for Donald Trump, and his endorsement of former president Trump has been widely believed to be a big assist in bringing Trump back to the White House. As such, his SpaceX organization is one that many investors would love to grab a piece of, but outside of employees and certain private investors, it’s not so easy to get one’s hands on shares. Destiny Tech100 is looking to change that.

Let’s Compare and Contrast This Fund

DXYZ distinguishes itself from other tech-focused investment funds through its unique structure and investment strategy. As a closed-end management investment company, DXYZ offers exposure to a portfolio of private technology companies like SpaceX and OpenAI, which are typically inaccessible to average investors. That in and of itself makes this particular ETF one that’s worth diving into, and that’s why it got my attention. A quick search of “how to invest in SpaceX” yielded me with the result. I was actually unaware until yesterday that the fund even existed. 

This is an interesting investment vehicle for a number of reasons, but I do think that generally-speaking, opening up private investment markets that are typically only available to private equity investors and other accredited investors is a good thing.

This fund does carry an annual management fee of 2.5%, so investors will certainly need to see big growth in order to justify such a fee. But in this case, I do think this fee could be worth it, as the company’s current portfolio of 22 privately-traded companies are rather illiquid, and gathering up shares into a pool may be a costly exercise in this case. Most other ETFs that track indices such as the NASDAQ (for high growth tech stocks) have expense ratios less than 0.1%, but again, these are two different animals altogether.

That said, there are some mutual funds managed by the likes of Fidelity and Baron Capital that provide similar exposure to companies like SpaceX without as much of an inflated premium, and I’m planning on diving into those as well. But it’s becoming clear that Destiny Tech100 is looking to build a portfolio of blue-chip private companies unlike most available in the market right now. I think such a strategy could warrant a premium, though it’s also one that’s likely to invite plenty of volatility given how marks tend to move much more slowly in the private markets. 

DXYZ Holdings

The DXYZ fund currently holds 23 companies, with SpaceX comprising 34.6% of its portfolio. While Musk has indicated that a SpaceX IPO is unlikely soon, speculation about a potential Starlink IPO is growing. Thus, the fund’s exposure to such companies positions it well to take advantage of future liquidity events, when they occur.

Despite DXYZ’s fair value being just $52.6 million in December, its market value surged to approximately $800 million. So, there’s a massive premium already built into this fund, and that’s going to be a key fundamental metric to watch. With less than 11 million shares outstanding, there’s clear scarcity for these shares in the marketplace, leading to this premium. I’m not sure if such a premium in any market is sustainable, so that’s likely going to remain a point of debate among investors for some time. 

Much like we saw with the SPAC boom of 2020 and 2021, perhaps this is a similar situation and investors ought to be wary of a similar drop seen in this fund in April. That could be the case. But with very limited access to such companies currently available, this is a fund I think could certainly see very strong momentum-driven moves from here.

So, Is this ETF a Buy?

Today’s surge of more than 40% in shares of DXYZ is emblematic of how this ETF have performed from a volatility standpoint of late. Investors need to be okay with this volatility, not only on up days like today, but when marks are taken down or investors look to sell. Again, liquidity is an issue in this case. But over time, I do think that as DXYZ is able to add more companies to its portfolio and ramp up its investment in a broader set of private tech giants, this is a fund that could certainly see the sort of AUM growth (as well as fundamental-led growth) that leads to a higher valuation over time.

This is an ultra-speculative vehicle I’m on the fence with right now. I’d say a new all-time high during the Trump presidency is certainly possible – one look at Donald Trump Media (DJT) tells that story pretty clearly.

But there are clear downside risks as well, so investors need to consider this ETF with both eyes wide open.

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