Yahoo Finance Time for IPO ETFs? (Revised)
The initial public offerings (IPOs) market was lackluster in 2023. Renaissance IPO ETF IPO was up 55% last year. But the U.S. IPO market may rebound in 2024. At least, initial activities are showing such signs. We have received hot inflation readings last week. But despite the slowdown in inflation not meeting initial expectations, the market response was subdued compared to past reactions.
Tuesday's inflation-driven dip had little lasting impact, as evidenced by the Renaissance IPO Index rising by 4.1% and closing the week in positive territory Year-to-Date (YTD) for the first time in 2024 (read: Is Revival in the IPO Market Anticipated for 2024? ETFs in Focus).
Wall Street Looks Steady
Although the S&P 500 experienced a slight decline of 0.4% last week, it still hovered near its record high on Friday. The primary takeaway is that we remain in an upward economic cycle. The recent performance of the IPO market reflects this trend, with the strongest showing of the year so far.
Volatility appears to be stabilizing, and indicators suggest a forthcoming increase in new issuances. Despite occasional bumps, the market quickly reverts to normalcy, a process notably faster than seen a year prior.
In Silicon Valley, there are reports of SVB resuming the hiring of bankers nearly a year after its previous setback, possibly signaling renewed confidence in the tech sector. Furthermore, if Reddit proceeds with its expected IPO in March, it could encourage more significant tech companies to consider going public.
February typically experiences a lull in major IPO activity, and this week was no exception. Only two small issuers, a drone tech developer (UMAC) and a pain relief biotech (CHRO), went public, but both made an underwhelmed debut.
Weekly IPO Winners of Renaissance IPO Index
Among the winners in the IPO Index, AppLovin (APP), an app development platform, surged by 29.2% on optimistic financial projections, per Renaissance Capital. Other winners included Coinbase Global (COIN) (up 27%), Robinhood Markets (HOOD) (up 21.2%), Marqeta (MQ) (up 13%) and Arm Holdings (ARM) (up 11.4%). As far as sectors are concerned, the financial sector has been the winner with about 6.1% gains.
Against this backdrop, below we highlight IPO ETFs in Detail.
ETFs in Focus
Renaissance IPO ETF (IPO)
The underlying Renaissance IPO Index captures approximately 80% of the total market capitalization of newly companies that have gone public within the last three years & meet certain size, liquidity & free float criteria. At each quarterly rebalance, new IPOs that meet the eligibility criteria are included & companies that have been public for three years or that no longer meet the criteria are removed. The fund charges 60 bps in fees.
First Trust US Equity Opportunities ETF (FPX)
The underlying IPOX-100 U.S. Index is a modified value-weighted price index measuring the performance of the top 100 companies ranked quarterly by market capitalization in the IPOX Composite U.S. Index. The IPOX Composite U.S. Index is a rules-based value-weighted index measuring the average performance of U.S. IPOs during their first 1,000 trading days. The fund charges 61 bps in fees.
(We are reissuing this article to correct a mistake. The original article, issued on Feb 20, 2024, should no longer be relied upon.)
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Renaissance IPO ETF (IPO): ETF Research Reports
First Trust US Equity Opportunities ETF (FPX): ETF Research Reports
