Business spin-offs provide an attractive growth play, and investors who would like to diversify with international stock exposure can take a look at the recently launched global spin-off exchange traded fund.
On the upcoming webcast, Capture the Full Potential of Spin-Offs Globally, Brandon Rakszawski, Product Manager for Van Eck Global, Ryan Casey, Research Analyst for Horizon Kinetics, and Salvator Tiano, Research Analyst for Horizon Kinetics, explain what spin-off business units are and the potential opportunities they provide for a global investor.
The recently launched Market Vectors Global Spin-Off ETF (NYSEArca: SPUN) tries to reflect the performance of the Horizon Kinetics Global Spin-Off Index, a rules-based, equal-weight index that tracks global spin-offs from the U.S. and developed markets of Western Europe and Asia. [Spinning Right Round: New Spin-Off ETF Debuts]
Spin-offs describe the creation of a new company through the sale or distribution of shares from an existing business, or parent company.
The spin-off typically generate better returns, compared to the parent company, since the new independent business can focus on a specific product or service over the long-term. While the spin-off may outperform, the smaller company is more volatile and could underperform in more turbulent conditions over the short-term.
SPUN includes some small-capitalization stock exposure at 16.4% of the fund’s portfolio, along with mid-caps 56.4% and large-caps 27.2%.