Liquid Alternatives: An ETF For Leveraged Exposure To Pre-Merger SPAC Securities
The new ETF from RiverNorth and Truemark embodies an active strategy in a liquid ETF format.
On July 12, the RiverNorth Enhanced Pre-Merger SPAC ETF (NYSEARCA: SPCZ) commenced trading on the NYSE. Launched by RiverNorth Capital Management, LLC and TrueMark Investments, the actively managed fund invests in pre-merger securities of SPACs (Special Purpose Acquisition Companies) whose business plan is to raise capital in an Initial Public Offering (IPO) and, within a specific period, engage in a merger or acquisition with one or more unidentified companies. (BusinessWire)
RiverNorth Enhanced Pre-Merger SPAC ETF (SPCZ)
The ETF will benefit from RiverNorth’s expertise in trading strategies and programs that derive value from buying and selling SPAC securities including units, common shares, and warrants.
The ETF will take leveraged exposure to pre-merger SPACs that are either seeking a target for a combination or have not yet completed a combination with an identified target. SPCZ aims to capture the potential discount, equity upside, and interest income of pre-merger SPACs.
SPCZ therefore seeks to increase leverage as shares trade below trust value and reduce leverage as shares trade above trust value.
“A goal of the Fund is to achieve positive absolute rates of return, particularly when measured against the level of risk assumed,” said a statement. “The Fund can be utilized in the alternatives allocation in a portfolio in an effort to capture alpha with low correlation to traditional asset classes.”
“RiverNorth has deep experience running SPAC strategies and we recognize that the value of a SPAC is often before it goes through a merger with a private business, the so-called de-SPAC transaction,” said Patrick Galley, Portfolio Manager for SPCZ and CEO/CIO of RiverNorth. RiverNorth is the Fund’s Sub-Adviser, with day-to-day portfolio management responsibility. “We are excited to bring this active strategy to market in a liquid ETF format.”
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