On Wednesday, the De-SPAC ETF (NYSE: DSPC) and the Short De-SPAC ETF (NYSE: SOGU) began trading on the New York Stock Exchange. They are the first ETFs to offer pure-play exposure to a basket of de-SPAC’d stocks.
De-SPACs are companies that come public due to a merger with a special purpose acquisition company (SPAC). High-profile de-SPACs include companies such as Virgin Galactic, DraftKings, QuantumScape, and Opendoor Technologies.
“These two ETFs follow the December 2020 launch of the SPAC and New Issue ETF (NYSE: SPCX),” says Matthew Tuttle, Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management LLC (“TCM”), who serves as the Adviser to DSPC and SOGU. “While SPCX’s actively managed strategy focuses on pre-deal SPACs, our conversations with investors brought us to the conclusion that there was an unmet need for a true de-SPAC exposure, both on the long and short side.”
As an alternative to the traditional initial public offering (IPO) process, SPAC IPOs have witnessed an acceleration in popularity over the past 18 months. Year-to-date, there have been 316 SPAC IPOs with gross proceeds of nearly $102 billion. That compares to 248 SPAC IPOs in 2020 representing $83.3 billion in gross proceeds.
“To frame the expected growth of the de-SPAC market, there are currently 129 announced and pending SPAC deals out there representing over $43 billion of capital. On top of that, there are over 400 SPACs with $135 billion that are still searching for a merger partner,” Tuttle commented. “We are very much in the de-SPAC dawn right now, and there are going to be many investment opportunities to hit the U.S. public markets in the years ahead.”
The De-SPAC ETF (DSPC) is designed to track the performance of the De-SPAC Index (DESPACTR on Bloomberg), an equally weighted portfolio of 25 of the largest de-SPACs on a rolling 12-month basis. The index is rebalanced monthly. The Short De-SPAC ETF (SOGU) is meant to provide an inverse (-1x the) return of the De-SPAC Index for a single day. It offers investors of all sizes convenient “one-ticker” access to an institutional-level short vehicle that may otherwise be difficult to execute.
For more information, please visit DESPACetfs.com.