Meme Fund Mania: Is DXYZ Stock Your Ticket to the Hottest Private Companies?

You’ve heard about meme stocks, but have you heard of meme funds? With the Destiny Tech100 (NYSE:DXYZ) fund, you can diversify your portfolio into unusual, high-risk assets. It’s not something you want to allocate too much of your capital towards, but audacious investors might want to give DXYZ stock a try.

I’m calling it a meme fund because the Destiny Tech100 share price rallied sharply before pulling back. So, you might be able to invest in the Destiny Tech100 fund at a comparatively favorable price today. But don’t hit that buy button until you’ve gotten the need-to-know details about Destiny Tech100, which I’ll give you right now.

Invest in the Uninvestable With Destiny Tech100

Do you want to buy common-stock shares of SpaceX and OpenAI? Good luck with that, as those currently aren’t publicly traded companies. However, as Bloomberg reported, you can get indirect portfolio exposure to those hot-topic businesses through DXYZ stock.

Destiny Tech100 invests in SpaceX, OpenAI and other forward-thinking businesses with technology angles. It’s a new fund that just started trading on the New York Stock Exchange on March 26 of this year.

Furthermore, an innovation-and-impact-focused company called Destiny XYZ Inc. manages the Destiny Tech100 fund. The fund’s purpose is to provide “everyday investors access to many of the world’s most exciting private businesses,” including SpaceX, OpenAI, Stripe and Discord.

I dug around and found a Securities and Exchange Commission (SEC) filing that reveals some more of the Destiny Tech100 fund’s holdings.

These are (or at least were, as of Dec. 31, 2023), for the most part, preferred shares of companies that most people won’t easily be able to invest in, such as Axiom Space, Impossible Foods and Bolt Financial.

Financial Faults, but a More Favorable Price

That same SEC filing revealed some startling financial data about Destiny Tech100 (the company, not the fund). Specifically, Destiny Tech100 sustained a net investment loss of $2.939 million in 2022 and a loss of $2.852 million in 2023.

That’s not a wonderful track record, I’ll admit. This is the main reason I’m warning investors to keep their DXYZ stock positions small, if they choose to invest in it at all.

Also, there’s the share-price volatility to consider. The stock, which started trading not long ago, already has a 52-week range of $8.25 to $105.

Recently, Destiny Tech100 stock traded at around $13, so at least you wouldn’t be chasing it near the top. If you’re going to buy a meme stock (or meme fund, in this case), it’s wise to wait until the risk-to-reward profile is favorable.

In other words, the meme-stock pop-and-drop cycle seems to already have taken place. Consequently, you might want to dip your toes in the water and buy a few reduced-price Destiny Tech100 shares.

DXYZ Stock: Position Sizing Is Key

The Destiny Tech100 fund enables access to otherwise uninvestable preferred stocks. The fund’s holdings represent some very interesting, innovative, tech-focused businesses.

If you’re on board with this and can accept a high level of risk, the Destiny Tech100 fund may be right for you. The key is to only hold a small number of DXYZ stock shares. That way, you won’t be overexposed if the fund’s value collapses in the coming months.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.