ETF Launches: SPAK

December 01, 2020


Defiance Next Gen SPAC Derived ETF (SPAK)
New fund covers an area previously uncharted in ETFs

Defiance ETFs, an issuer focused on providing passive exposure to disruptive innovation, launched an ETF targeting special purpose acquisition corporations (SPACs). The Defiance Next Gen SPAC Derived ETF (SPAK) tracks an index provided by Indxx and invests in a mix of SPACs (20% weight at reconstitution) and SPAC-derived companies (80%), the prospectus says.

The fund lists on the NYSE Arca and comes with a expense ratio of 0.45%.

SPACs are similar to IPOs or private equity in that they are companies formed with the intention of acquiring or merging with an existing company. They have a set period in which to complete this transaction or they are dissolved and the money returned to investors.

Matthew Bielski, CEO of Defiance, describes SPACs as “private-equity-style IPOs.”

The underlying index has minimum size, float and liquidity requirements. Although reconstitutions occur on an annual basis, securities can be added to the index throughout the year on set dates. At the ETF’s launch, the index had 36 components.

Bielski noted that there is also a governance clause that screens out any company that is subject to a fraud-related investigation. As such, Nikola Motor Company, a popular SPAC-related company that is currently under SEC investigation, is not in the index.

Source: Data and information as of 10/31/2020.
ETF Filings sidebar covers launches and closures for the month of October 2020.

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