As more global economies look to return to normal following the Covid-19 pandemic, more start-up companies can resume activity to offer initial public offerings (IPOs) in the marketplace. One ETF is already benefitting this year despite the pandemic—enter the Renaissance IPO ETF (NYSEArca: IPO), which is up over 50%.
IPO seeks to replicate the price and yield performance of the Renaissance IPO Index, which is a portfolio of companies that have recently completed an initial public offering (“IPO”) and are listed on a U.S. exchange. The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the index. It normally invests at least 80% of its total assets in securities that comprise the index, which is a portfolio of companies that have recently completed an initial public offering (“IPO”) and are listed on a U.S. exchange.
Per a recent CNBC article, the fund is “closing in on $100 million in assets under management. The ETF closed up nearly 1% after hitting an all-time high on Friday. The ETF buys into the top 80% largest companies by market cap that have debuted in the last two years and rebalances quarterly to give the biggest players a chance to be added on a fast-entry basis. Its top holding, as of Thursday, were Zoom Video, Uber, Pinduoduo, Moderna, and Nio.”
“To see what the rest of the year is, take one look at what’s happened so far this year after the market basically shut down in March,” said Renaissance Capital co-founder and Chairman Kathleen Smith. “Year to date, we’re ahead of last year after that shutdown. And, in fact, … this August is going to finish up with more capital raised, I think, than any August on the record books. So, we’re seeing an amazing turnaround, an amazing amount of issuance in the regular IPO market.”
IPO data by YCharts
Another fund worth looking at is the First Trust US Equity Opportunities ETF (NYSEArca: FPX). FPX seeks investment results that correspond generally to the price and yield of an equity index called the IPOX®-100 U.S. Index, which seeks to measure the performance of the equity securities of the 100 largest and typically most liquid IPOs, including spin-offs and equity carve-outs of U.S. companies.
For investors seeking IPO opportunities around the globe, the Renaissance International IPO ETF (NYSEArca: IPOS) adds an international spin to the IPO market. IPOS tracks the rules-based Renaissance International IPO Index, which adds sizeable new companies on a fast-entry basis with the rest upon scheduled quarterly reviews. Current IPOS holdings include SoftBank Corp, Xiaomi and China Tower Corp.
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