--- title: "Defiance files AI index funds that may also buy private companies" url: "https://etf.net/news/defiance-ai-funds-eye-private-firms-2026-10-30" published_at: "2026-10-30T12:15:03.011Z" updated_at: "2026-10-30T12:15:03.011Z" byline: "ETF.net Research" --- # Defiance files AI index funds that may also buy private companies Investors cannot buy the shares yet, and a private stake would come through vehicles that charge a one-time access fee of 5% to 8%, in a batch that also includes two model-run income funds that are not for sale either. By ETF.net Research. Published Oct 30, 2026. On Thursday, Oct. 29, ETF Series Solutions filed with the Securities and Exchange Commission for two Defiance artificial-intelligence index funds that may put up to **15%** of their assets in private companies the indexes do not hold. ETF Series Solutions is the trust Defiance uses to issue its ETFs. It would issue these shares too. Defiance ETFs would advise the funds. Three registration statements cover four proposed funds, and investors cannot buy any of them yet. Each statement says the shares cannot be sold until registration is effective, and each proposes to become effective 75 days after it was filed. The two income funds share one prospectus. ## Private companies the indexes do not hold The [Defiance Sovereign AI ETF](https://www.sec.gov/Archives/edgar/data/1540305/000089418926029925/defiancesovereignai485a.htm) and the [Defiance Developed ex US AI & Power Infrastructure ETF](https://www.sec.gov/Archives/edgar/data/1540305/000089418926029956/defiancedevelopedexuspower.htm) would each primarily track an index, before fees and expenses. Tidal Investments would sub-advise both. Each may also put up to 15% of net assets into privately issued securities of companies that are not in the index, held directly or through a vehicle that holds one private company's securities and is sponsored by an unaffiliated firm. Defiance does not currently expect that stake to exceed approximately 5% of the fund's net assets at the time of purchase. The filings call 15% an outside limit, not a target. Those holdings are expected to be treated as illiquid. The fund would pay a one-time upfront access fee of approximately 5% to 8% of the amount it invests in the vehicle. The fee-table footnote says the fund would bear that cost indirectly. It is not a direct cost paid by shareholders. Defiance says it is not aware of any such vehicle, so the table estimates the cost at 0.00%. The annual management fee is not yet stated. The Sovereign AI fund would track the INDXX Sovereign AI Index. The prospectus defines sovereign AI as the ability of a nation, a government, or regulated entities or companies to develop, deploy and control artificial intelligence using their own infrastructure, data and models, without relying on external or foreign providers. Indxx sorts that into five sub-themes: Defense AI and National-Security; Critical-Infrastructure AI Deployment; Data Infrastructure; Cloud Infrastructure; and AI Cybersecurity, Governance, and Compliance. A company needs at least 50% of its revenue from one of them. The index takes up to six companies from each sub-theme and equal-weights them. The developed-markets fund would track the MarketVector Developed Markets ex US AI and Power Infrastructure Index. The companies are in developed markets outside the United States. About 40% of the index is power generation and electric-grid equipment, and 30% is data centers and AI hardware. Construction and engineering, and electric utilities and power producers, are about 15% each. A new constituent generally needs at least 50% of revenue from those activities, and no holding may exceed 5%. Defiance already sells the U.S. counterpart. The Defiance AI & Power Infrastructure ETF, AIPO, tracks an index of U.S.-listed companies that derive at least 50% of revenue from AI hardware, data centers, power infrastructure or related sectors. [Defiance](https://www.defianceetfs.com/aipo/) reported $866 million in net assets as of Oct. 29, and a gross expense ratio of 0.69%. Chart: AIPO's biggest names are **grid and power**, not the chips ## Options income, chosen by a model The income funds are not baskets of artificial-intelligence companies. Their [prospectus](https://www.sec.gov/Archives/edgar/data/1540305/000089418926029923/defianceaifundsautonomousi.htm) registers the Defiance Ai Funds Nasdaq Autonomous Income ETF and the Defiance Ai Funds S&P 500 Autonomous Income ETF. Ai Funds, Inc., a Sausalito, Calif., company, and Milliman Financial Risk Management would be the sub-advisers. Ai Funds' model, an artificial-intelligence system, would choose the stocks, size the positions and write the calls. The firm already runs a listed ETF. It said the Ai Funds High Conviction US Equity AI-Managed ETF, HIAI, began trading on Aug. 21 on the Cboe BZX exchange. "Ai Funds does not substitute its own security selection for that of the AI Investment Model," the prospectus says. The Nasdaq fund seeks a total return, from current income and capital appreciation, that exceeds the Nasdaq-100. The other seeks the same against the S&P 500. Under normal circumstances, each would put at least 80% of net assets in stocks from its index, or in instruments, including options, that give exposure to those stocks or to the index. The Nasdaq fund would typically hold 20 to 50 Nasdaq-100 constituents. The S&P 500 fund would typically hold 40 to 100. The premiums are meant to supply the income. In exchange, the fund gives up gains past the price at which the calls can be exercised. Each fund seeks a distribution at least monthly, drawn from that month's option premium plus dividends and interest. The prospectus sets no target rate. It expects those payments to exceed the fund's earnings and profits in some or all tax years, so all or a portion may be a return of capital. That is the investor's own money coming back. It generally is not taxed when paid, but it reduces the fund's net asset value and the shareholder's cost basis. NEOS Investments already sells the large funds on these two indexes. The [NEOS Nasdaq-100 High Income ETF](https://neosfunds.com/qqqi/), QQQI, had $15.3 billion in net assets as of Oct. 29, and the [NEOS S&P 500 High Income ETF](https://neosfunds.com/spyi/), SPYI, had $12.7 billion. Both report total annual fund operating expenses of 0.68%. Defiance's existing Nasdaq-100 options fund is a different product, and a much smaller one. The Defiance Nasdaq 100 Weekly Distribution ETF, QQQY, sells daily credit call spreads on the Nasdaq-100 and states a target annual cash distribution of approximately 30% of net asset value. The target is not guaranteed. [Defiance](https://www.defianceetfs.com/qqqy/) reported $184 million in net assets as of Oct. 29, and a gross expense ratio of 1.01%. Source: etf.net, https://etf.net/news/defiance-ai-funds-eye-private-firms-2026-10-30. Please cite the page URL.