Morgan Creek and EXOS Launch SPAC Originated ETF
Chapel Hill-based Morgan Creek Capital Management and New York's EXOS Financial have launched the Morgan Creek – Exos SPAC Originated ETF (ticker: SPXZ) on Jan. 26, 2021. This actively managed ETF invests in Special Purpose Acquisition Companies (SPACs) and their associated public companies. The fund allocates two-thirds of its assets to the largest completed SPAC mergers and one-third to pre-combination SPACs. With an expense ratio of 1.00%, SPXZ aims to provide transparent, liquid access to innovative companies emerging from SPAC transactions.
- Launch of SPXZ provides investors with targeted access to innovative companies from SPACs.
- ETF structure offers liquidity and transparency for investors.
- Active management could enhance returns by focusing on high-performing SPACs.
- Expense ratio is competitive at 1.00%.
- SPACs are inherently risky; some may not complete profitable combinations.
- Post-combination SPACs can experience extreme volatility and illiquidity.
- The fund is non-diversified, increasing exposure risk to individual securities.
CHAPEL HILL, N.C., Jan. 26, 2021 /PRNewswire/ -- Chapel Hill, North Carolina-based asset manager Morgan Creek Capital Management and New York-based fintech company EXOS Financial today launched the Morgan Creek – Exos SPAC Originated ETF (ticker: SPXZ), an actively managed ETF with an investment strategy focused on Special Purpose Acquisition Companies, or SPACs, and the public companies born from them.
SPXZ seeks to provide investors with liquid, transparent, actively managed exposure to a portfolio of the innovative companies that go public via SPAC mergers. The fund expects to hold approximately two thirds of its capital in an equal dollar weighted portfolio of the largest companies to have completed SPAC mergers over the past three years, and approximately one third of its capital in an equal dollar weighted portfolio of pre-combination SPACs.
"We're absolutely thrilled to partner with EXOS to launch SPXZ," said Mark Yusko, CEO and Chief Investment Officer at Morgan Creek Capital Management. "As an increasing number of the most innovative companies in the potential 'industries of the future' choose to go public via SPACs, we think it's important to provide investors with a liquid, transparent, actively managed vehicle to gain access to those companies of the future."
"We're very excited to be partnering with Morgan Creek on SPXZ," said Brady Dougan, CEO at EXOS Financial. "We see SPACs as an area we can add tremendous value. One where our experience, knowledge of management teams, relationships, and a deep understanding of evolving technological trends is a true differentiator."
SPXZ targets the largest 50 pre-combination and largest 50 post-combination SPACs in building its portfolio. "We believe active management should be a key consideration for those investing in this space," said Mark Yusko, CEO and Chief Investment Officer at Morgan Creek, "because historically, SPAC returns have been bifurcated, with the top deals performing very well, but the bottom deals performing poorly. Given the nature of the embedded sponsor incentives in these deals, we expect this performance bifurcation should continue in the future."
Sometimes referred to as "blank check" companies, Special Purpose Acquisition Companies, or SPACs, are investment vehicles that enable a management team to raise capital via an IPO with the express purpose of engaging in a business combination with an operating company. SPAC mergers have increasingly become the preferred way for many of the most innovative companies from an increasing number of the potential "industries of the future" to raise capital and go public, as we believe the structure offers several advantages over a traditional initial public offering.
The expense ratio of SPXZ is
About Morgan Creek Capital Management
Morgan Creek Capital Management is an asset manager founded by Mark Yusko, the former CIO of the University of North Carolina Endowment. Morgan Creek uses an endowment-like approach to investing, specializing in targeting opportunistic-focused investments. The firm has decades of investment experience and relationships around the globe, and is a thematic investor focusing on important secular trends such on innovative technology, the wealth transfer to developing markets, next generation consumers, as well as demographics and new models in healthcare.
About EXOS Financial
EXOS is a fintech company building a modern institutional finance platform to disrupt the legacy investment banks. Helmed by Brady Dougan, the former CEO of Credit Suisse, EXOS has deep experience and intellectual property in all aspects of SPACs. With SPXZ, EXOS is bringing its banking, capital markets, technology expertise, and resources to its first publicly listed fund.
Carefully consider the Fund's investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund's prospectus and summary prospectus, which may be obtained by calling (855) 857-2677. Read the prospectus carefully before investing.
Investing involves risk, including the possible loss of principal. Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Past performance is no guarantee of future results.
The Fund invests in equity securities and warrants of SPACs. Pre-combination SPACs have no operating history or ongoing business other than seeking Combinations, and the value of their securities is particularly dependent on the ability of the entity's management to identify and complete a profitable Combination. There is no guarantee that the SPACs in which the Fund invests will complete a Combination or that any Combination that is completed will be profitable. Unless and until a Combination is completed, a SPAC generally invests its assets in U.S. government securities, money market securities, and cash. Public stockholders of SPACs may not be afforded a meaningful opportunity to vote on a proposed initial Combination because certain stockholders, including stockholders affiliated with the management of the SPAC, may have sufficient voting power, and a financial incentive, to approve such a transaction without support from public stockholders. As a result, a SPAC may complete a Combination even though a majority of its public stockholders do not support such a Combination. Some SPACs may pursue Combinations only within certain industries or regions, which may increase the volatility of their prices. The Fund invests in companies that are derived from a SPAC. These companies may be unseasoned and lack a trading history, a track record of reporting to investors, and widely available research coverage. Post-Combination SPACs are thus often subject to extreme price volatility and speculative trading. Post-Combination SPACs may share similar illiquidity risks of private equity and venture capital. The free float shares held by the public in a Post-Combination SPAC are typically a small percentage of the market capitalization. The ownership of many Post-Combination SPACs often includes large holdings by venture capital and private equity investors who seek to sell their shares in the public market in the months following a Combination transaction when shares restricted by lock-up are released, causing greater volatility and possible downward pressure during the time that locked-up shares are released. Because the Fund is "non-diversified," it may invest a greater percentage of its assets in the securities of a single issuer or a lesser number of issuers than if it was a diversified fund. As a result, a decline in the value of an investment in a single issuer or a small number of issuers could cause the Fund's overall value to decline to a great degree than if the Fund held a more diversified portfolio. The fund is new and has a limited operating history.
Markets have experienced significant periods of volatility in recent years due to a number of economic, political and global macro factors, including the impact of the coronavirus (COVID-19) pandemic and related public health issues. As a result, the risk environment remains elevated.
Opinions expressed are subject to change at any time, are not guaranteed and should not be considered investment advice.
The Morgan Creek – Exos SPAC Originated ETF (SPXZ) is advised by Morgan Creek Capital Management, LLC, sub-advised by Exos Asset Management, LLC, and distributed by Foreside Fund Services, LLC.
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SOURCE Morgan Creek Capital Management
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