Play IPOs Without The Risk

The Tesla Motors TSLA initial public offering this past month, reignited investors interest in IPOs. Shares of the electric car manufacturer surged to a high $30.42 before falling below its $17 IPO price. Currently, the shares fetch around that $17 mark. This helps illustrate that investing in initial public offerings can be a rocky ride. Investors wanting to add some IPO alpha to their portfolios without needing to guzzle Pepto-Bismol, do have a few choices for broad diversification. The First Trust US IPO Index ETF FPX follows a value-weighted price index measuring the performance of the top 100 U.S. IPOs ranked quarterly by market capitalization. The ETF was up nearly 46 percent in 2009. Holdings include electronics store hhgregg HGG, fruit grower Dole DOLE and advanced battery maker A123 Systems AONE. The Claymore/Beacon Spin-Off ETF CSD follows a basket of stocks that have been spun-off from their parent within the past two years. These include Cadbury spin off, Dr Pepper Snapple Group DPS and EW Scripps SPP TV properties into Scripps Networks Interactive SNI.