First blank-check ETF begins trading as SPAC euphoria continues
- Wall Street's obsession with special-purpose acquisition vehicles can now be tracked through an exchange-traded fund.
- The Defiance Next Gen SPAC Derived ETF will begin trading on the New York Stock Exchange on Thursday, the issuer said in a press release.
- The ETF will trade under the ticker SPAK and track both companies created through SPAC mergers and blank-check companies that haven't yet found a target.
- The complex product's arrival comes as SPAC investing enjoys an extraordinary surge in popularity. More than 120 SPAC IPOs have taken place in 2020 so far, more than double last year's count, according to SPACInsider.com.
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The first exchange-traded fund tracking so-called blank-check companies will begin trading on Thursday, marking the next stage in Wall Street's infatuation with the new investment vehicles.
The Defiance Next Gen SPAC Derived ETF will debut on the New York Stock Exchange with the ticker SPAK, according to a Thursday press release. The fund includes a basket of firms taken public after merging with special-purpose acquisition companies, or SPACs.
Defiance's ETF will also follow SPACs that have gone public but not yet identified a target.
"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," Defiance said in its release.
Blank-check companies have surged in popularity this year. The firms raise capital through initial public offerings with the intention of merging with a private company and taking the combined entity public. SPACs typically have two years to find a company to merge with, and owners aren't required to publicize a target before taking a SPAC public.
More than $45 billion has been raised across 120 SPAC IPOs in 2020 so far, according to SPACInsider.com. That pace trounces the 59 deals and $13.6 billion in proceeds seen throughout all of last year.
Some of the year's biggest investing stories are attached to the new financial-market craze. Billionaire hedge fund manager Bill Ackman made waves in July when his SPAC, Pershing Square Tontine Holdings, raised a record $4 billion in its trading debut. Last year's biggest SPAC IPOs have seen strong momentum continue in 2020, with Virgin Galactic, DraftKings, and Nikola all boasting hefty year-to-date gains.
Four-fifths of SPAK's holdings will consist of IPOs derived from SPAC mergers, according to an August Securities and Exchange Commission filing. The other fifth will track shares of SPACs that haven't yet picked a target.
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