Market Overview

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

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

The rest of the holdings are: 

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

Defiance launched the Defiance Quantum ETF (NYSE: 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. 


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