Reduce Your Risk In The Initial Public Offering Market With This IPO ETF

“Everybody loves the romance of an IPO — a company going public with the potential to deliver huge profits to those investors on the ground floor. But the reality of initial public offerings are very different than the storybook version some traders believe. Trying to research these tiny upstarts can give investors fits, and sometimes even a stock that looks good on paper can fall flat on its face right out of the gate,” Jeff Reeves Reports From Investor Place.

Reeves goes on to say, “So how can you grab some of the romance of IPOs without the heartache of failures like NIVS IntelliMedia Technology (NIV)? One way is to invest in an IPO mutual fund or ETF that casts a wider net. This adds some diversification to your holdings but still allows the explosiveness of newly-minted stocks. Take the First Trust IPOX 100 Index (FPX) that tracks an index of the 100 top IPOs in the United States. The fund measures performance of these IPOs by market cap, and rebalances quarterly.”

“Now, don’t confuse this with actually being part of the initial public offering. Those golden tickets are saved for company insiders, or the sister of a brother of a cousin of an insider. The First Trust IPOX 100 Index adds in these newly-minted stocks on their seventh day of trading. The crafty folks at IPOX say this is designed to capitalize on a long-term “buy and hold” perspective, and to weed out some of the volatility caused in the early days of trading. On their 1,000th day on the market — that’s a little less than three years – these IPOs are too stale to stick around and are moved out of the ETF as components,” Reeves Reports.

See more details to the story: HERE

IPOs have always grabbed the attention of investors and the First Trust IPOX 100 ETF (FPX) is a great way to get in on the IPO action.  The ETF is thinly traded but does hold the key to getting into new publicly traded companies without landing the failure of one single IPO.  We put together some details on the ETF along with a list of the components within the ETF below:

The investment (IPO) seeks results that correspond generally to the price and yield of the IPOX-100 U.S. index. The fund normally invests at least 90% of total assets in common stocks that comprise the index. The index is a modified value-weighted price index measuring the performance of the top 100 companies ranked quarterly by market capitalization in the IPOX Global Composite index. It is nondiversified.

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