Renaissance Capital Launches IPO ETF
Investing in a company’s IPO can be very financially rewarding.
Some of the biggest stock gains of all-time have been made by investing in a stock when it’s still in its infancy. Anyone who bought Microsoft (MSFT) or Google (GOOG) soon after their IPO knows what I’m talking about.
But with so many IPOs these days, it’s difficult (if not an impossible task) for regular investors to spend the time needed to identify good companies and avoid the bad ones.
The task of researching IPOs is made more difficult by the SEC. Any investment bank that takes a company public isn’t allowed to issue any research on the company for a period of time after the company becomes public.
It’s even more difficult for ETF investors to get in on the early stages because indexes are slow to include newly public stocks. It’s not uncommon for months to pass until a new company is added to an index and included in an ETF.
A new ETF from Renaissance Capital addresses these problems head on.
First off, a little background on Renaissance Capital. They specialize in pre-IPO fundamental analysis. In other words, they do the research to figure if an IPO is good as an investment or not before there’s a lot of information available.
Needless to say, that’s no easy task. And they’ve developed a reputation for being one of the best in the business.
Now for the good stuff…
The newly launched Renaissance IPO ETF (IPO) provides investors with a tap into a portfolio of newly public companies before they’re included in most ETFs.
In fact, new companies are included in the index on a fast entry basis on the fifth day of trading, or upon quarterly review, and are removed after two years when the IPOs become seasoned stocks.
But not every new IPO makes the cut… the ETF only includes the most economically significant newly public companies. The index is designed by Renaissance Capital research to hold the largest, most liquid newly-listed US IPOs.
IPO currently has 50 holdings. The stocks with the largest weight are Facebook (FB) with 10.9%, Michael Kors (KORS) 9.75%, Zoetis (ZTS) 9.6%, and Delphi Automotive (DLPH) 9.58%.
This ETF is the first of its kind. It gives ETF investors a way to get exposure to newly public companies before they’re included in other ETFs. This is one ETF anyone who uses ETFs to invest should consider adding to their portfolio.
Good Investing,
Corey Williams
Category: ETFs, What's Going On?
