3 ETF's To Capture The SPAC Market

It’s been a busy week of earnings in the market with big fintwit names like Shopify and Fastly reporting. This has kept things interesting along with Bitcoin pushing over the $50k mark.

Seems every week I am talking about a new bitcoin high.

Personally, the only move I made was adding to QQQ. Yeah, call me boring but you know how I like my ETFs.

In other news the CCIV has seen it’s price rocket to $60 on news of the Lucid merger going mainstream, which leads us perfectly into this week’s email about SPAC ETF’s.

Before we get into it I hope you are warm and safe. Many of my fellow Texans have been without power for days. Stay safe out there friends.

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“No price is too low for a bear or too high for a bull.” - Unknown

First, a quick education on SPAC’s for both of us.

SPAC is short for “special purpose acquisition company.” These are blank check companies who raise money with the sole purpose of either merging or acquiring a private company.

The fun part is that investors can invest into these SPACs before they announce a company to take public. In this pre-deal phase SPAC shares are issued at $10. If within 24 months the SPAC doesn’t find a company the investors get back their shares back at $10.

Essentially, SPACs are an easier way for companies to go public.

While reading up on these I came across a few ETFs in this area of the market. I do not hold any positions in these but found them interesting and wanted to share.

SPAK - Defiance Next Gen SPAC Derived ETF

Assets Under Management: $109 million

Expense Ratio: 0.45%

Inception Date: 9/30/2020

Year To Date Return: 23.4%

This fund is the only index-based SPAC in the market. It’s unique as it invests in both SPAC and SPAC-merged companies.

As of February 1st, 2021 the fund has a 20/80 mix of pre and post deal SPACs.

Furthermore, it’s also a market-cap weighted portfolio meaning the largest deals will be the most heavily weighted in the portfolio.

Top Holdings:

SPCX - SPAC and New Issue ETF

Assets Under Management: $192 million

Expense Ratio: 0.95%

Inception Date: 12/15/2020

Year to Date Return: 24.8%

SPCX is different from the previous in that it only invests in pre merged SPACs. This actively managed fund prides itself on finding the best management teams in the SPAC market. This is unique as the individuals responsible for a SPAC can be they key to whether it is successful or not. Note though that SPCX will not hold the post-merger company.

Top Holdings:

SPXZ - Morgan Creek - Exos SPAC Originated ETF

Assets Under Management: $49 million

Expense Ratio: 1.00%

Inception Date: 1/25/2021

Year To Date Return: Since it has existed for less than a month I’m not even worrying about the return.

SPXZ is similar to SPCX in that it is also an actively managed ETF. It is different in the way that it invests in 1/3 SPAC and 2/3 SPAC-merged companies.

Another important note is that it is an equal weighted portfolio.

Their management teams explains their approach as being willing to hold their investments for a long amount of time. Being in the business of buying SPACs is a volatile one so we’ll see how well they can stick to such a strategy.

Top Holdings:

Conclusion

Before investing in any of these I would for sure do additional research to see which SPAC strategy fit my portfolio best. At the moment SPAK is my favorite simply since it is index based and has also been around for the longest.

That said, I’m not jumping over hurdles to go buy any of these, but rather using these ETFs as a way to understand how the market is evolving.

Okay serious stuff aside, let’s see the meme winner…

While SPAC ETFs are not included, Index Fund Investing 101 will give you all the information you need on how to successfully invest in the markets with minimal time.

Learn the best way to build a portfolio that will grow passively for generations.

Remember Deep F** Value from the $50,000 to $50,000,000 email?

Well our boy went through his first hearing before congress yesterday.

His background did not disappoint.

Thanks for reading, if you have any questions, comments, suggestions, etc. about the email send me a DM on twitter. See you next week!