The new wealth secret of the US stock market: Elon Musk! Related funds have surged 500%

According to the Zhitong Finance APP, from top hedge funds on Wall Street to small-scale day trading firms and retail investors, those who dared to place big bets on the business empire of the world's richest man, Elon Musk, or any assets associated with Musk himself, have reaped huge investment returns this year. This is largely due to Donald Trump's victory in the November U.S. election, which has brought immense wealth to the billionaire and is likely to provide continuous positive stimuli for his business empire.

“Elon Musk” has naturally become the new wealth code in the U.S. stock market, with popularity rivaling that of the well-known wealth code since 2023: the Magnificent Seven (which includes Tesla, Nvidia, and Apple). Musk's "core role effect" in the Trump administration has significantly boosted the value of all companies he founded or leads, including Tesla, the private unicorn SpaceX, and xAI. Fund companies such as Destiny Tech, Baron Partners, and ARK Investment Management led by "Cathie Wood" have also emerged as the biggest winners in the financial market.

Musk's full support for Trump during the campaign, along with his appointment by Trump as the head of the newly established "Department of Government Efficiency," which is significant for reforming the U.S. federal government, has made all the companies he founded or leads, including Tesla, SpaceX, and xAI, some of the hottest assets globally. Since November, their market values have skyrocketed, with Musk's personal wealth exceeding $400 billion, making him the first person to reach a net worth of $400 billion, marking a new milestone for the world's richest man.

Tesla (TSLA.US), led by Musk, has become the hottest stock in the U.S. stock market and even the global market since November. Since Trump's election victory in November, Tesla's stock price has seen a "surge," rising over 70% since then, with a market value reaching $1.3 trillion. Tesla's stock closed at $418.100 on Thursday, surpassing the $400 high target price set by Bank of America, Morgan Stanley, and Wedbush.

Musk began to invest heavily in supporting Trump after the "understanding king" Trump was assassinated, demonstrating his determination to "go all in" on Trump. For investors bullish on Tesla's stock price and Musk's fans, Trump's return to the White House and his announcement that Musk will lead the "Department of Government Efficiency" will fundamentally change the narrative logic for Tesla and the companies under CEO Musk in the coming years regarding artificial intelligence, humanoid robots, autonomous driving, and Tesla's AI supercomputing system. They believe this will address Musk's long-standing complaints about "federal government inefficiency" and the delayed regulatory review of Tesla's FSD and Robotaxi In terms of a series of regulatory challenges, there may be an acceleration of "qualitative change" in the review process.

Destiny Tech100, the strongest "Musk concept stock"

Among those who successfully seized the "Musk market," including Tesla, ARKW, and ARKK, there is one that stands out with a unique attribute: the closed-end fund "Destiny Tech100" (DXYZ.US). Since the U.S. presidential election on November 5, the value of this closed-end fund, which can be publicly traded like an ETF in the U.S. stock market, has skyrocketed by over 500%.

Data shows that this closed-end fund invests in unicorn companies in the private market, with its latest documents indicating that more than one-third of its holdings are bets on SpaceX, the space exploration unicorn founded by Musk. Trump's victory has led retail investors and some leveraged hedge funds to flock to this fund, resulting in a staggering premium on the fund's trading price relative to the overall valuation of its underlying assets.

"The presidential election is a huge catalyst for these 'Trump and Musk derivatives,'" said Todd Sohn, an ETF strategist at Strategas. "Musk is clearly closely connected to the government, so investors are going to funds that can quickly access companies associated with him."

Some traditional stock-picking fund companies, such as Baron Partners Fund, have also emerged as winners. The fund's return rate this year is close to 40%, far exceeding the Nasdaq 100 Index and the S&P 500 Index, after experiencing losses just before the election. The fund manager Ron Baron, in his eighties, has long held Tesla as his largest position, accounting for 40% of his assets, and as of November, he has also increased his stake in SpaceX to as much as 10%.

Another "turning point" inspirational story related to Musk this year is the flagship product of ARK Investment Management, led by "Wood Sister" Cathie Wood— the $7 billion U.S. stock ETF—ARK Innovation ETF (ARKK). As of October, ARKK still had negative returns for the year, but since the election, its year-to-date increase has reached 20%, with almost all of the gains concentrated after November. ARKK has consistently maintained a heavy position in Tesla.

Additionally, the ARK Next Generation Internet ETF has risen by over 50% this year, holding significant exposure to Tesla, Bitcoin, and related digital asset companies. ETF strategist Sohn views these as the most direct beneficiaries of the "Musk trade."

Tesla, led by Musk, is expected to benefit from the new government, which will simplify the review process for the launch of autonomous ride-hailing (i.e., Tesla Robotaxi) and accelerate the review of Tesla's "fully autonomous driving (FSD)" operating system. Furthermore, if the U.S. government eliminates tax credits for electric vehicles, Musk stated that this would benefit Tesla rather than its competitors Most of SpaceX's revenue comes from contracts with the U.S. government, and it may gain more support during the Trump administration.

Although SpaceX, valued at $350 billion, has become the world's most valuable startup, Tesla, led by Musk, seems to perform even better, with its market value soaring by over $500 billion since the U.S. presidential election. The overall valuation of xAI, the artificial intelligence startup founded and led by Musk, has more than doubled since its last funding round in May, reaching an astonishing $50 billion.

However, some stocks that have seen significant increases may carry risks, as their trading prices are often far above their underlying assets. For example, the overall valuation of Destiny Tech100 is $800 million, the highest since April, with its trading price more than 10 times the latest reported net asset value, making it the highest premium among similar closed-end funds.

Data compiled by institutions show that the Baron Fund has been in the top 1% of its peer funds over the past month. Although concentrating bets on a single stock can backfire, this aggressive strategy has turned around the fund's poor performance this year.

Bloomberg Intelligence analyst David Cohen commented on the "super reversal" regarding the Baron Fund and "Cathie Wood's" ARK, saying, "I wouldn't say this is common. These funds have been rewarded for management's extreme confidence in Tesla, thanks to Musk's relationship with Trump."