[Ticker Inside] A SPACtacular New Play
Last week, I told you about SPACs, and how you can spot a good one from a bad one.
Since then, you may have done your own research or had your broker help you choose the SPAC or SPACs right for you.
If you didn’t, or if you found it difficult to choose the right SPACs for your portfolio, I have a solution for you today.
You see, SPACs right now are hot, and everyone wants to get into the action somehow.
This includes the company I’ll be talking about today.
But unlike a normal SPAC, this one wildly differs from the rest…
The SPAC Portfolio That Manages Itself
Defiance NextGen SPAC IPO ETF (SPAK) is exactly what it says — the first ETF for SPACs.
Now, you may be wondering what on Earth an ETF is.
Think of it as a portfolio within your portfolio managed by an investment firm.
An ETF is a bundle of investments all packaged into one easily purchasable ticker.
For instance, if you wanted to invest in the general markets but didn’t want to buy all 500 stocks in the S&P 500, you could buy the SPDR S&P 500 ETF Trust (SPY). This would allow you to buy all the stocks for much cheaper than if you would have paid for each stock in the S&P 500. Plus, the managers of the ETF automatically weigh the ETF, so you don’t have to buy and sell positions yourself.
In the case of SPAK, Defiance ETFs brought together 36 different companies that are either IPO companies derived from SPACs or the regular stock of newly listed SPAC companies.
This means that you will get into both ends of the SPAC game — both the new companies that have already announced an IPO and the special acquisition companies looking to find partners to go public with.
Below you can see a snapshot of their top-10 holdings:
You may notice some familiar names on there like DraftKings, Virgin Galactic or even Clarivate. Companies like these make up 80% of SPAK’s holdings.
The lesser-known names like Repay Holdings Corp. are the SPAC companies that make up the other 20%.
The positions are rebalanced every quarter to give you the best shot at making it big off SPACs and SPAC-derived companies.
As with any ETF, there is an expense ratio for investing in SPAK.
SPAK has an expense ratio of 0.45%, though, which is well below the market standard of 0.74%.
This means that for every $1,000 you invest in SPAK, you will need to pay $4.50 to Defiance ETF.
Think of it as $4.50 for a financial adviser to manage $1,000 of your portfolio.
Defiance has also had a history in the past couple years of creating ETFs with good track records.
Of the first three they’ve released thus far, all of them are yielding profits, even with the downturn of the pandemic.
This includes Defiance Next Gen Connectivity ETF (NYSE: FIVG), the first ETF for 5G stocks, and Defiance Quantum ETF (NYSE: QTUM) that focuses solely on companies developing quantum computers.
They continue the trend of following the hottest trends on the market with SPAK.
And if you want to take a passive, easy way to get into the SPAC game, then consider adding SPAK to your portfolio.
I’ll be on the lookout for more opportunities for you in the coming days!
To a bright future,