RiverNorth Capital Management, LLC and TrueMark Investments today announced the launch of the RiverNorth Enhanced Pre-Merger SPAC ETF (SPCZ), trading on the NYSE. SPCZ is an actively managed Fund that invests in pre-merger securities of SPACs (Special Purpose Acquisition Companies) whose business plan is to raise capital in an Initial Public Offering (IPO) and, within a specific period, engage in a merger or acquisition with one or more unidentified companies. Trading in the new Fund is live today.
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“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, which will act as Adviser to the Fund.
“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,” said Patrick Galley, Portfolio Manager for SPCZ and CEO/CIO of RiverNorth. RiverNorth is the Fund’s Sub-Adviser, with day-to-day portfolio management responsibility. “We are excited to bring this active strategy to market in a liquid ETF format.”
The Fund 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. 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. The Fund can be utilized in the alternatives allocation in a portfolio in an effort to capture alpha with 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 vs. the terms and conditions of deals already trading in the secondary market; the portfolio is adjusted for the best opportunities.
About RiverNorth Capital Management, LLC
RiverNorth Capital Management, LLC is an investment management firm founded in 2000. With $5.7 billion1 in assets under management as of May 31, 2022, RiverNorth specializes in opportunistic investment strategies in niche markets where the potential to exploit inefficiencies is greatest. RiverNorth is an institutional investment manager to registered funds, private funds and separately managed accounts.
1. Includes assets attributable to leverage and investments in affiliated funds.
About TrueMark Investments
At TrueMark, we serve investors with ETFs that seek to deliver true exposure to thematic, modern economy asset classes, strategies, and industries. We pair investment expertise with industry knowledge and experience, partnering with 3rd parties we believe are specialized, highly qualified industry experts to power investment management decisions, all at a price comparable to passive management.
New Fund Risk. The Fund is a recently organized investment company with no operating history. As a result, prospective investors have no track record or history on which to base their investment decision.
Leverage Risk. The use of leverage is speculative could magnify the Fund’s gains or losses and increase risk. This is the speculative factor known as leverage. Borrowing also may cause the Fund to liquidate positions under adverse market conditions to satisfy its repayment obligations. Borrowing increases the risk of loss and may increase the volatility of the Fund.
Pre-Combination (Pre-Merger) SPAC Risk. 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.
Some SPACs may pursue Combinations only within certain industries or regions, which may increase the volatility of their prices. In addition, the Fund may invest in vehicles formed by SPAC sponsors to hold founder shares, which may be subject to forfeiture or expire worthless and which generally have more limited liquidity than SPAC shares issued in an IPO. In addition, the Fund may invest in vehicles formed by SPAC sponsors to hold founder shares, which may be subject to forfeiture or expire worthless and which generally have more limited liquidity than SPAC shares issued in an IPO.
Foreign Securities Risk. Foreign SPACs Investments in SPACs domiciled or listed outside of the U.S. may involve risks not generally associated with investments in the securities of U.S. SPACs, such as risks relating to political, social, and economic developments abroad and differences between U.S. and foreign regulatory requirements and market practices. Further, tax treatment may differ from U.S. SPACs and securities may be subject to foreign withholding taxes.
Small-Cap Risk. SPACs will have a more limited pool of companies with which they can pursue a business combination relative to larger capitalization companies. That may make it more difficult for a small capitalization SPAC to consummate a business combination.
Liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price.
Distributor: Foreside Fund Services, LLC.
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