Alternative Investments/VC: The Defiance SPAC ETF Starts Trading

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The Defiance Next Gen SPAC Derived ETF is the first “blank check” ETF.

Defiance ETFs announced Thursday the trading launch of the very first SPAC (Special Purpose Acquisition Company)-focused ETF. Its Defiance Next Gen SPAC Derived ETF (NYSE: SPAK) began trading Thursday. The ETF will provide investors exposure to previously private companies that obtained listing by combining with a SPAC. The ETF will also invest in SPACS that are still holding cash pending an acquisition or merger. (Bloomberg Wealth)

Defiance Next Gen SPAC Derived ETF

The ETF will invest 80% of its holdings in newly-listed companies created out of SPACs. The other 20% will be in still “blank-check” companies that are waiting to deploy their cash in a startup or other private company.

“Picking the winners of individual SPACs can be very difficult, however, the ETF structure allows investors to access the most liquid SPAC IPOs in a diversified basket,” Defiance said in a statement. “SPAK allows both financial advisors and retail investors to participate in an IPO private equity style of investing, which until now, was only available to large financial institutions.”

The ETF will track the Indxx SPAC & NextGen IPO Index, a passive rules-based index that tracks the performance of the common stock of newly listed Special Purpose Acquisitions Corporations (SPACs), ex-warrants, and IPOs derived from Special Purpose Acquisitions Corporations.

The passively managed ETF charges a fee of 0.45%.

However, there are doubts about whether the SPACs market has enough liquidity.

“Pre-acquisition SPACs have the most potential to surge on news of a deal, but most are tiny and thus unable to fill out an entire ETF,” wrote BI analysts Eric Balchunas and Morgan Barna in a report, according to Bloomberg.

Defiance Thematic ETFs

Defiance is a specialist ETF sponsor focusing on “dynamic sub-sectors that are leading the way in disruptive innovations.”

It previously launched the FIVG (5G ETF) and IBBJ (Junior Biotech ETF).

Launched on March 4, 2019, the FIVG ETF has delivered a return of 9.68% year to date.

Launched on August 3, the IBBJ ETF has delivered 4.85% to date.

Related Story:   FinTech Acquisition Corp IV, A Blank Check Company, Raises $230M In SPAC IPO

Image source: Wikimedia Commons                                                

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