We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Moderna, Inc. (MRNA) - free report >>
Alphabet Inc. (GOOGL) - free report >>
Renaissance IPO ETF (IPO) - free report >>
First Trust US Equity Opportunities ETF (FPX) - free report >>
Zoom Video Communications, Inc. (ZM) - free report >>
CrowdStrike (CRWD) - free report >>
Why IPO ETFs are Soaring in 2020
The biggest story in the market last week was the public debut of two highly anticipated IPOs. Airbnb (ABNB - Free Report) shares more than doubled on their debut, giving the company a valuation exceeding the combined market capitalizations of Marriott, Hilton and Hyatt.
The shares of food delivery company DoorDash (DASH - Free Report) soared about 90% in their trading debut. The company, which is still unprofitable, has seen a surge in demand for its services due to the pandemic.
Investors’ love for unprofitable young companies is leading to concerns about froth in the market. The two stocks are down 7% and 9% respectively today.
2020 has been a record year for IPOs. 208 IPOs have priced this year, up 32.5% from last year while total proceeds raised are $76.4 billion, up 65.1% from last year, per Renaissance Capital.
IPO ETFs provide exposure to newly public companies before they join other core US equity indexes. Most broad market indexes include newly public companies only after a ‘seasoning’ period—i.e. after they have been trading for some time. For example, Google (GOOG) was included in the S&P 500 index about two years after its debut.
The Renaissance IPO ETF (IPO - Free Report) holds the largest, most liquid newly-listed US IPOs. Large IPOs are added on a fast entry basis and the rest are added during scheduled quarterly reviews. Companies that have been public for two years are removed at the next quarterly review. Moderna (MRNA - Free Report) , Zoom video (ZM - Free Report) and CrowdStrike (CRWD - Free Report) are its top holdings. The ETF has surged more than 100% this year.
The First Trust US Equity Opportunities ETF (FPX - Free Report) holds 100 largest, and most liquid U.S. IPOs. Eligible stocks are purchased after the close on the 6th trading day and held for about four years. It has returned about 45% this year. To learn more about these ETFs, please watch the short video above.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>