Elon Musk's Enthusiasm Sparks 500% Surge for Prominent Fund -

From significant Wall Street investments to individual traders, those who embraced considerable risks associated with Elon Musk’s ventures are concluding the year with impressive profits, as Donald Trump’s US electoral win elevates the wealth of the globe’s richest individual.

Musk’s support for Trump during the campaign and his later appointment to the newly created Department of Government Efficiency have transformed his companies, such as Tesla and the privately held unicorns SpaceX and xAI, into highly coveted assets. This year, their market valuation has surged, propelling Musk’s personal wealth to over $400 billion.

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One notable player in the Musk trade is the closed-end fund Destiny Tech100 Inc., which has increased by over 500% since the November 5 election. This fund specializes in shares of private unicorns, and recent disclosures revealed that more than a third of its investments were in SpaceX as of late September. Following Trump’s victory, a wave of retail investors rushed into the fund, causing its shares to reach a remarkable premium over the value of its underlying assets.

“The election served as a major catalyst for these ‘Trump derivatives’,” remarked Todd Sohn, an ETF strategist at Strategas. “Musk is clearly linked to the administration, prompting investors to pursue funds providing immediate access to his companies.”

Traditional stock pickers like the Baron Partners Fund have also enjoyed gains. The fund is on track for nearly a 40% year-to-date return — significantly exceeding the Nasdaq 100 — after initially facing negative results prior to the election. Its experienced manager, Ron Baron, has Tesla as the largest component of the fund, making up 40% of its assets, while SpaceX accounted for 10% as of November.

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Cathie Wood’s flagship $7 billion ARK Innovation ETF has also seen a turnaround this year due to its association with Musk. Despite facing a disappointing year as of October, the ARKK fund jumped by more than 25% following the election.

Additionally, the ARK Next Generation Internet ETF, which invests in Tesla, Bitcoin, and digital asset firms, is projected to gain over 50% this year. Sohn from Strategas identifies these as key beneficiaries of the surge in Musk-related investments.

Musk’s businesses are anticipated to flourish under the expectation that the new administration will promote the implementation of self-driving vehicles and eliminate tax incentives for electric cars, providing an advantage to Tesla’s rivals. Moreover, SpaceX derives a significant portion of its revenue from US government contracts, which are likely to receive more support under a Trump presidency.

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With SpaceX’s valuation reaching $350 billion, it has established itself as the most valuable startup in the world, while Tesla’s market capitalization has surged past $500 billion since the election. Musk’s AI venture, xAI, is believed to have more than doubled its value to $50 billion since its last funding round in May.

However, some of the investment vehicles enjoying significant gains may also carry risks, as they frequently trade at considerable premiums relative to their underlying assets. For instance, DXYZ’s $800 million valuation is the highest since April, trading at more than ten times its last reported NAV, making its premium one of the highest among comparable closed-end funds.

Conversely, the Baron fund has recently positioned itself in the top 1% of its category, according to Bloomberg data. While making concentrated investments can have disadvantages, this strategy has enabled the fund to recover from its earlier underperformance this year.

“I wouldn’t say it’s common,” commented David Cohne, an analyst at Bloomberg Intelligence, regarding the reversal. “The fund was rewarded for management’s confidence in Tesla, which reaped the benefits of Musk’s affiliation with Trump.”

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