Casey also explained the spin-off research and investment strategy behind the recently launched Market Vectors Global Spin-Off ETF (NYSEArca: SPUN), which tries to reflect the performance of the Horizon Kinetics Global Spin-Off Index, which equally weights components.
Specifically, SPUN will build a position in the early stages after a spin-off occurs, capitalizing on short-term selling pressure to buy low. Additionally, index components will be held for five-years to capture any potential long-term opportunities.
“Early, long-term stock positions allow index to capture full spin-off cycle,” according to Horizon Kinetics.
Looking at back-tested historical data, the Horizon Kinetics Global Spin-Off Index has returned an average annualized 14.97% from the end of 2003 through the end of May, 2015. In contrast, the MSCI World Index returned an average 7.0% over the same period.
Additionally, SPUN tracks global opportunities, including a large tilt toward the U.S. 66.3%, along with U.K. 6.5%, Australia 5.5%, Finland 3.4%, Switzerland 2.4%, France 2.4%, China 1.7% and Ireland 1.5%, among others.
Financial advisors who are interested in learning more about company spin-offs can listen to the webcast here on demand.