Spin-offs and mergers may appeal to investors because they can signal a company's efforts to focus its business, realign its operations, or even seek new leadership. In the case of large conglomerates, it can be hard for investors to accurately assess which units might be the most profitable or fastest-growing—a spin-off can help clarify.
These deals can also lead to new opportunities to find high-growth businesses that were once attached to more stable firms, or to access mispriced stocks that have been impacted by forced selling by institutional investors or funds. However, because keeping track of all of the M&A and spin-off activity taking place across the market may take up a disproportionate amount of an investor's time, two exchange-traded funds (ETFs) are uniquely designed to focus on developments of this kind.
