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U.S. IPO Market Sizzles: ETFs to Bet On

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The U.S. IPO market is sizzling this year, as companies broke the annual 2020 record in raising capital within less than six months. This is especially true, as IPOs have raised $171 billion so far this year, surpassing last year's record of $168 billion, according to data from Dealogic.

The boom came on the back of a skyrocketing stock market driven by rapid vaccinations, Fed’s easing monetary policy and expanded stimulus. These tailwinds have fueled a wave of speculative frenzy that have benefited not only traditional companies that have gone public, but also special purpose acquisition companies (SPACs) formed strictly to raise money through IPOs. About 339 SPACs have been formed this year, raising roughly $105 billion or nearly two-thirds of the total IPO volume, according to data from SPAC Research. This is well above the $83 billion for all of 2020.

Some of the blockbuster IPOs of this year include South Korean e-commerce firm Coupang, cybersecurity firm Darktrace, and cryptocurrency exchange Coinbase Global (read: Coinbase Debuts, Bitcoin & Blockchain ETFs Soar).

The solid IPO trends are likely to continue in the second half given a number of high-profile startups such as China’s largest ride-sharing company Didi Chuxing Technology Co Ltd, online brokerage Robinhood Markets Inc., payments giant Stripe, and electric-vehicle maker Rivian Automotive. By the end of the year, IPOs are expected to fetch a staggering $250-$300 billion.

Investing in multiple IPOs could be a difficult task. So, investors can easily tap the IPO boom with Renaissance IPO ETF (IPO - Free Report) and First Trust US Equity Opportunities ETF (FPX - Free Report) . Additionally, investors looking to take advantage of new growth stocks could also bet on Defiance Next Gen SPAC Derived ETF , SPAC and New Issue ETF (SPCX - Free Report) and Morgan Creek Exos SPAC Originated ETF .

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