Market Overview

SPAC Fever Finds Another ETF Home In New Tuttle Fund

SPAC Fever Finds Another ETF Home In New Tuttle Fund

The rapid growth in special purpose acquisition companies this year notched another milestone Wednesday when the second exchange traded fund dedicated to the asset class came to market.

What Happened: The SPAC and New Issue ETF (NYSEARCA: SPCX), courtesy of Tuttle Tactical Management, joins the SPAC ETF party, following a competitor that came to market in late September and is finding quick success.

One of the obvious differences between the rival blank-check ETFs is that the Tuttle offering is actively managed, an investment style that could be advantageous in the fast-growing SPAC space.

“As there is limited information on publicly-traded SPACs, selecting the right SPAC in which to invest can seem like a daunting task,” Tuttle CEO Matthew Tuttle said in a statement.

Why It's Important: With SPCX, Tuttle is looking to carve out a niche in a hot asset class where the rigidity of index-based strategies can turn off aggressive investors yearning for more amid blank-check mania.

As of Dec. 8, there have been 217 SPAC initial public offerings  raising a combined $74 billion in 2020.

Not only do those figures represent significant percentages of the overall U.S. IPO market in 2020, they dwarf the 59 SPAC IPOs that raised a combined $13.6 billion in 2019.

The new SPCX, which holds 43 blank-check stocks, sets itself apart from passive rivals in another way. An index-based SPAC strategy is likely to be chock full of companies already born of SPACs. Think DraftKings (NASDAQ: DKNG) and Virgin Galactic (NYSE: SPCE). Likewise, the SPACs in an index are likely to have already announced deals, meaning the related shares already popped.

Conversely, the new SPCX is comprised entirely of SPACs, some of which are still in pre-deal stage.

Top 10 holdings include Churchill Capital Corp. IV (NYSE: CCIV), Foley Trasimene Acquisition (NYSE: WPF), Social Capital Hedosophia Holdings Corp. VI (NYSE: IPOF) and Social Capital Hedosophia Holdings Corp. V (NYSE: IPOE).

What's Next: “While the IPO pipeline looks robust for 2021, the SPAC market is one of rapid change and opportunity,” Tuttle said. “As a result, we feel the most appropriate strategy for managing a portfolio of SPACs is through active management, as it can be more flexible in reacting to market events. This is no place for an index fund based on a rigid set of rules.”

The new SPCX charges 0.95% per year, or $95 on a $10,000 investment.


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