Wall Street’s fascination with special-purpose acquisition companies, or SPACs, has spread to the exchange-traded funds market.
Three new ETFs are vying for investor dollars to play the market’s newest obsession: betting that selling startup companies to private-equity pros and other financial players will prove to be a better way to fund growth companies than the traditional initial public offering.
But will small fry make money on these funds, or succumb to a SPAC attack?
So far, the verdict is mixed. Of the three ETFs, one is up this year and one is down, while the other has declined since opening for trading Jan. 26. The latest arrival, Morgan Creek Capital’s ETF (SPXZ), opened at $25.19 in January and is trading at $21.36. ETF (SPCX) from Tuttle Capital Management closed last year at $25.95 and is trading around $28.51, while ETF (SPAK), from Defiance ETFs LLC, is at $26.81, down from $28.65 at year-end. All three peaked in mid-February before selling off alongside shares of technology and electric-vehicle companies.
“I’m always looking for noncorrelated asset markets, and all of a sudden these SPACs started coming out,” says Matt Tuttle, chief executive of Tuttle Capital Management. “I was blown away by a structure that allows individual investors to get access to venture-capital or private-equity-like investments.’’