For the past months, SPACs and SPAC ETFs have become one of the hottest trends in the investment world. Special Purpose Acquisition Companies (SPACs) are “blank cheque” companies with no commercial operations that are listed on stock exchanges for the purposes of buying a private company, thereby making it public.
These vehicles are sought after for their advantages over traditional IPOs: enhanced simplicity, faster timeframe, more transparent valuation and a cost structure that incentivizes long term investing. If an IPO is a company looking for money, SPAC is money looking for a company.
In February, global transactions in SPACs reached a new monthly record of $109bn according to the Financial Times and the ETF industry was quick to jump on the opportunity.
Is there a SPAC ETF?
So far there are 3 SPAC ETFs available to US investors – but none in Europe. They hold close to $270 million in assets as of the 15th of March.
- The Defiance NextGen SPAC Derived ETF – SPAK US – was the first ETF investing in SPACs to hit the market in September 2020. The fund relies on a passive strategy to oversee its $83m of assets. It allocates 60% of its investments to IPO companies derived from SPACs while the remaining of the funds are invested to common stock of newly listed SPACs. The SPAC ETF is up 13% year to date as of the 15th of March.
- But if you feel that active management is the preferred choice for investing in this space, then take a look at the SPAC and New Issue ETF – SPCX US – launched last December now manages $146m of assets. Its investment team believes investing in SPACs calls for an active wrapper given the dynamic nature of the evolving SPAC market. So far, the strategy seems to work as the ETFs is up more than 17% year to date.
- Alternatively, the Morgan Creek – Exos SPAC Originated ETF – SPXZ US – listed in January, follows a slightly different approach. The $38m fund invests both in U.S.- listed SPACs but also in companies that have merged with or been acquired by a SPAC.
Top 3 SPAC ETFs – ETFs investing in SPACs
| Ticker | Label | AuM in $m | YTD perf. | Listing date |
| SPAK US | Defiance NextGen SPAC Derived ETF | 83 | +13.0% | 30/09/2020 |
| SPCX US | SPAC and New Issue ETF | 146 | +17.2% | 16/12/2020 |
| SPXZ US | Morgan Creek – Exos SPAC Originated ETF | 38 | -0.4% | 26/01/2021 |
Source: TrackInsight, data as of the 15th March 2021
As listed securities, SPACs are also starting to appear in new thematic ETFs. For example, last week Tuttle Tactical Management registration documents with the SEC to list an ETF with the ticker FOMO (fear of missing out). The ETF will be an active fund with weekly rebalancing in an attempt to catch the latest trends in the market. Its investment mandate will allow the fund to invest in a vast array of products including global equities, derivatives, volatility, other ETFs and in particular SPACs.
If it exists, there’s an ETF for it
These new listings again highlight the ability of ETFs to rapidly react to fresh investing trends. In less than 30 years, ETFs have conquered almost every corners of the financial markets and continue to democratize access to new exposures, strategies and ideas.
Click here to screen more than 6800 ETFs on TrackInsight.com.
