The schedule of initial public offerings in 2014 has been
steady, with fresh companies being offered as enticements to new
Even well-known brands like King Digital Entertainment (NYSE:
) and Ally Financial (NYSE:
) are taking advantage of the favorable market environment to
With so many new names, it's often difficult to decide what
companies are going to perform well and which ones will fall
Fortunately, there are exchange-traded funds that offer
diversified access to newly issued IPOs and even companies that
have a moderately established track record.
The Renaissance Capital IPO ETF (NYSE:
) is designed to provide investors with exposure to newly issued
public companies before they are included in more traditional
This ETF has the ability to select a new public company for
inclusion in its portfolio after only five days of initial
trading history. The companies are then eliminated from the
index after they have two years of trading history.
Energy ETFs Surge On Higher Commodity Prices
That means IPO can potentially access new business models and
economically significant companies very quickly after they are
brought to market. In fact, both KING and ALLY were
recently added to the underlying holdings shortly after their
The fund currently has a portfolio of 56 companies spread
among a variety of sectors and market cap styles.
Another ETF that seeks to access relatively new companies is
the First Trust IPO Index Fund (NYSE:
This fund is based on a modified value-weighted price index
measuring the performance of the top 100 companies in the IPOX
Global Composite Index.
Generally speaking, FPX will include companies in their IPO
index that have the best performance during the first 1,000
Therefore, the underlying holdings tend to be more established
names like Facebook (NASDAQ:
) and General Motors Company (NYSE:
) that have longer trading histories.
While these ETFs have different strategies for accessing
freshly minted public companies, they both deserve to be in the
conversation when analyzing new capital opportunities.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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