RiverNorth Capital Management and TrueMark Investments today announced the launch of the RiverNorth Enhanced Pre-Merger SPAC ETF (NYSE Arca: SPCZ). Trading in the new fund is live today on the NYSE.
SPCZ is an actively managed fund that invests in pre-merger securities of Special Purpose Acquisition Companies (SPACs) whose business plan is to raise capital in an initial public offering and, within a specific period, engage in a merger or acquisition with one or more unidentified companies. TrueMark Investments will act as adviser to SPCZ, while RiverNorth will serve as the fund’s sub-adviser, responsible for the day-to-day management of the portfolio.
“SPCZ is the first pre-merger SPAC ETF to opportunistically deploy leverage while giving investors access to RiverNorth’s trading strategies and programs that seek to derive value from buying and selling SPAC securities including units, common shares, and warrants,” said Mike Loukas, CEO of TrueMark Investments, in a news release.
SPCZ invests primarily in pre-merger SPACs that are either seeking a target for a combination or have not yet completed a combination with an identified target. Pre-merger SPACs often have predetermined time frames within which to consummate a combination (typically two years) at which time the SPAC will seek to extend the time frame or liquidate.
Patrick Galley, portfolio manager for SPCZ and CEO/CIO of RiverNorth, added in the release: “RiverNorth has deep experience running SPAC strategies and we recognize that the value of a SPAC is often before it goes through a merger with a private business, the so-called de-SPAC transaction. We are excited to bring this active strategy to market in a liquid ETF format.”
The fund aims to capture the potential discount, equity upside, and interest income of pre-merger SPACs. A goal of the fund is to achieve positive absolute rates of return, particularly when measured against the level of risk assumed. SPCZ can be used in the alternatives allocation in a portfolio to capture alpha with a low correlation to traditional asset classes.
The fund employs leverage opportunistically based on valuations. SPCZ seeks to increase leverage as shares trade below trust value and reduce leverage as shares trade above trust value. The investment team pays particular attention to the terms and valuation of new issuers versus the terms and conditions of deals already trading in the secondary market. The portfolio is adjusted for the best opportunities.
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