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SPAK - Democratizing and Disrupting the IPO market

SPAK - Democratizing and Disrupting the IPO market

https://www.defianceetfs.com/spak/

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. SPAK allows both financial advisors and retail investors to participate in an IPO private equity style of investing which is usually only available to large financial institutions. A 60% weighting is applied to IPO companies derived from SPACs and 40% is allocated to common stock of newly listed Special Purpose Acquisition Companies (“SPACs”), ex-warrants.

The Indxx SPAC & NextGen IPO Index is a passive rules-based index that tracks the performance of the common stock of newly listed Special Purpose Acquisition Companies (“SPACs”), ex-warrants, and initial public offerings (“IPOs”) derived from Acquisition Companies. SPACs are companies with no commercial operations that are established solely to raise capital from investors for the purpose of acquiring one or more operating businesses.

SPACs give emerging companies both flexibility and control, while investors finally have access to some of the biggest investment deals in the market.

Even before the onset of Covid-19, which made the roadshow practically much more difficult, there was a need for greater transparency and efficiency in the traditional IPO process. SPACs offer a quicker and simpler route to public status, bring retail investors in to changing trends and emerging opportunities.

While it’s hard to predict which SPACs will be successful, an ETF mitigates some of this risk by spreading exposure over a range of the largest SPAC companies. 2020 saw 248 SPACs raising over $83.4 billion1. As of June 6, 2021, there are 421 SPACs looking for an acquisition with a buying power of $134 billion.2