SPUN will also 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. Top components include Chemours 2.0%, Global Brands Group Holding 1.8%, Navient 1.5%, Hyster-Yale Materials Handling 7.5% and Wpx Energy 1.5%.
The ETFs benefit from the stock price appreciation that typically accompany a company spin-off.
A spinoff is the creation of an independent company through the sale or distribution of new shares of existing business or division of a parent company, according to Investopedia. Spinoffs can increase returns for shareholders due to the newly independent company’s ability to better focus on specific products or services. Both the parent and spin-off typically perform better through less bloat as a result of the transaction, with the spin-off often outperforming.
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