Defiance NextGen SPAC IPO ETF Launches: What Investors Need To Know

An ETF based on special purpose acquisition companies that trades on a U.S. exchange is now available to investors for the first time. 

About The New ETF: The Defiance NextGen SPAC IPO ETF SPAK began trading Thursday.

The ETF will hold common stock of newly issued SPACs (ex-warrants) and IPOs derived from SPACs.

The ETF will be passively managed and rebalanced quarterly. The expense ratio for the ETF is 0.45%.

“The Defiance team is excited to bring to market the first SPAC ETF. 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,” according to the ETF's prospectus. 

The ETF's Holdings: The SPAC ETF plans on holding an 80% weighting to IPOs from SPACs and a 20% weighting to new SPACs. The ETF will screen IPO companies monthly and new SPACs quarterly.

In the future, the requirements to be included will be a market value between $200 million and $5 billion, a six-month average volume of 2 million shares and a free float of at least 10%.

The top 10 holdings in the SPAC ETF are:

• DraftKings Inc DKNG: 18.75%
• Clarivate PLC CCC: 12.24%
• Vertiv Holdings VRT: 9.54%
• Vivint Smart Home VVNT: 5.15%
• Open Lending Corp LPRO: 4.82%
• Broadmark Realty Capital BRMK: 4.67%
• Immunovant Inc IMVT: 4.19%
• Virgin Galactic Holdings SPCE: 3.52%
• Repay Holdings Corp RPAY: 2.96%
• Churchill Capital Corp III CCXX: 2.91%

The rest of the holdings are: 

• Immatics NV IMTX
• PAE Inc PAE
• Flying Eagle Acquisiton Corp FEAC
• Ranpak Holdings Corp PACK
• Spartan Energy Acquisition Corp SPAQ
• Onespaworld Holdings Ltd OSW
• Utz Brands Inc UTZ
• Churchill Capital Corp II CCX
• Accel Entertainment Inc ACEL
• Adapthealth Corp AHCO
• Conyers Park II Acquisition Corp CPAA
• Fintech Acquisition Corp III FTAC
• Forum Merger II Corp FMCI
• Graf Industrial Corp VLDR
• Apex Technology Acquisition Corp APXT
• Global Blue Group Holding GB
• Tuscan Holdings Corp THCB
• Hi Foods Group Inc HFFG 
• Juniper Industrial Holdings JIH
• Whole Earth Brands FREE
• Gx Acquisition Corp GXGX
• Crescent Acquisition Corp CRSA
• Trine Acquisition Corp TRNE
• Silver Spike Acquisition Corp SSPK
• Grid Dynamics Holdings GDYN

Benzinga’s Take: The ETF has a heavy weighting to DraftKings, one of the most successful SPACs.

Michael Klein, who recently launched his fifth SPAC, is well represented with Clarivate and Churchill Capital Corp III both in the top 10 and Churchill Capital Corp II also among the ETF's holdings. 

The top 10 holdings are all completed SPAC deals along with Churchill Capital Corp III, which has already announced a deal to acquired MultiPlan.

The ETF has several holdings with pending deals like Spartan Acquisition (Fisker), Flying Eagle (Skillz), Trine (Desktop Metal) and Forum Merger (Tattooed Chef). Graf Industrial just completed its merger to become Velodyne this week. 

THE ETF holds shares in several SPACs that are still actively searching for deals like CCX, CPAA, FTAC, APXT, JIH, THCB, GXGX, CRSA and SSPK, which could be good places for investors to begin. This ETF is showing faith in the leaders of those companies by including them in the fund prior to deal announcements. 

About Defiance ETFs: Launched in 2018, Defiance is now home to several thematic ETFs.

The company is behind the Defiance Next Gen Connectivity ETF FIVG, which focuses on the growth of 5G. Shares are up 9% in 2020. The ETF has nearly $500 million in assets under management.

Defiance launched the Defiance Nasdaq Junior Biotech ETF IBBJ in August.

Defiance launched the Defiance Quantum ETF QTUM in 2018.

SPAK Price Action: The ETF opened for trading at $25.81 and was up 1.2% at $26.05 at the time of publication Thursday.