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Welcome to Episode #244 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is joined by Zacks Director of ETF Research, Neena Mishra, to talk about the hot IPO and SPAC market.
In 2020, 286 companies have gone IPO through the beginning of October, putting it on pace to be the most active year for IPOs since 2014.
We’ve had some big companies go IPO already in 2020 including Snowflake (SNOW - Free Report) and Wall Street is waiting for Airbnb.
SPACs, which stands for Special Purpose Acquisition Company, is another way for a company to go public but it involves blank check companies listing on the public market and then acquiring other companies.
Some of the best-known SPACs include hot sports betting company DraftKings (DKNG - Free Report) , whose shares are up 430% this year.
How to Get IPO and SPAC Exposure in Your Portfolio
But just buying one hot IPO or SPAC here or there probably isn’t going to provide you with enough diversity in your portfolio.
After all, how do you know which IPO or SPAC to invest in out of all of those going public?
What if you choose the “wrong” one?
This is a situation that is well-suited to the world of ETFs.
Not only can an ETF take the guesswork out of investing, because it will own dozens of IPOs and SPACs in one basket, but it will also give you diversity within the IPOs in terms of industry and sector.
3 Simple Ways to Invest in IPOs and SPACs
1. Defiance NextGen Derived SPAC ETF just launched in October 2020. It’s the first SPAC ETF to come on the market. It has 36 holdings and is rebalanced on a quarterly basis. SPAK’s largest holding is DraftKings at 18.8% of the portfolio.
2. Renaissance IPO ETF (IPO - Free Report) has a fast entry for the hottest IPOs to be added quickly, such as Snowflake which will be added shortly. Otherwise new IPOs are added quarterly. It has 47 holdings and only holds the companies for 2 years. Shares are up 70% year-to-date as the ETF’s largest holding is ultra-hot Zoom Video.
3. First Trust US Equity Opportunity ETF (FPX - Free Report) is the oldest and largest of the IPO ETFs as it was launched in 2006. It has 100 holdings and distinguishes itself from the Renaissance ETF by also investing in spin-offs and mergers. New IPOs are added on their 6th day of trading and remain in the portfolio for 4 years. The holding period means that it’s top 10 list of companies is very different from that of Renaissance.
What else do you need to know about adding IPOs and SPACs to your portfolio?
Listen to this week’s podcast to find out.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
The Simple Way to Invest in the Hottest SPACs and IPOs in 2020
Welcome to Episode #244 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is joined by Zacks Director of ETF Research, Neena Mishra, to talk about the hot IPO and SPAC market.
In 2020, 286 companies have gone IPO through the beginning of October, putting it on pace to be the most active year for IPOs since 2014.
We’ve had some big companies go IPO already in 2020 including Snowflake (SNOW - Free Report) and Wall Street is waiting for Airbnb.
SPACs, which stands for Special Purpose Acquisition Company, is another way for a company to go public but it involves blank check companies listing on the public market and then acquiring other companies.
Some of the best-known SPACs include hot sports betting company DraftKings (DKNG - Free Report) , whose shares are up 430% this year.
How to Get IPO and SPAC Exposure in Your Portfolio
But just buying one hot IPO or SPAC here or there probably isn’t going to provide you with enough diversity in your portfolio.
After all, how do you know which IPO or SPAC to invest in out of all of those going public?
What if you choose the “wrong” one?
This is a situation that is well-suited to the world of ETFs.
Not only can an ETF take the guesswork out of investing, because it will own dozens of IPOs and SPACs in one basket, but it will also give you diversity within the IPOs in terms of industry and sector.
3 Simple Ways to Invest in IPOs and SPACs
1. Defiance NextGen Derived SPAC ETF just launched in October 2020. It’s the first SPAC ETF to come on the market. It has 36 holdings and is rebalanced on a quarterly basis. SPAK’s largest holding is DraftKings at 18.8% of the portfolio.
2. Renaissance IPO ETF (IPO - Free Report) has a fast entry for the hottest IPOs to be added quickly, such as Snowflake which will be added shortly. Otherwise new IPOs are added quarterly. It has 47 holdings and only holds the companies for 2 years. Shares are up 70% year-to-date as the ETF’s largest holding is ultra-hot Zoom Video.
3. First Trust US Equity Opportunity ETF (FPX - Free Report) is the oldest and largest of the IPO ETFs as it was launched in 2006. It has 100 holdings and distinguishes itself from the Renaissance ETF by also investing in spin-offs and mergers. New IPOs are added on their 6th day of trading and remain in the portfolio for 4 years. The holding period means that it’s top 10 list of companies is very different from that of Renaissance.
What else do you need to know about adding IPOs and SPACs to your portfolio?
Listen to this week’s podcast to find out.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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