Two exchange-traded funds have built exposure to Elon Musk's SpaceX that exceeds the 15% regulatory limit set by the SEC, according to recent filings. This development highlights growing pressure on traditional investment vehicles as they seek access to high-growth private companies that have stayed public longer.

Private market investments have become increasingly attractive to fund managers as companies like SpaceX, Stripe, and Instacart remain private for extended periods. The 15% cap was established to protect retail investors from the risks associated with less liquid, less transparent private securities. However, the surge in demand for private market exposure has pushed some funds to test these boundaries.

The SEC's restrictions on private company holdings in ETFs reflect broader concerns about market transparency and investor protection. As more capital flows into private markets, regulators face pressure to balance innovation in investment products with safeguards for retail investors. This tension between investor demand and regulatory limits is likely to intensify as the private market continues to grow.