As the U.S. market begins to look a little bit healthier,
initial public offerings have started to gain more momentum. You
can play the revived IPO market with one exchange traded fund (
The tech sector has experienced the largest shifts in IPO
offerings, with companies in China faring a lot better.
Paul Bard, vice president of research at Renaissance Capital in
Greenwich, commented that "tech IPOs over the course of 2010 have
definitely had ups and downs," with "a pocket of strength in March,
followed by some tough sledding in April/May as the broader markets
writes Benjamin Pimental for MarketWatch
. Tech IPOs started gaining momentum "more significantly over the
last three months with tech/growth IPOs in particularly far
outperforming their slow-growth or less exciting IPO counterparts,"
Bard adds. [
IPO ETF: Signs of Life.
The biggest anticipated name in the tech market is Skype, but
larger social-networking names like Facebook and LinkedIn have yet
to announce a public offering. Other
notable IPO offerings
include, Invensense, which dabbles in motion sensing and processing
tech; Demand Media, an online media rental site; and Zipcar, a
car-sharing services provider.
Bard notes that "investors have been quite vocal in what they
are looking for, which is secular growth, a strong business model,
and a large market opportunity and trading liquidity." Investors
have also been sensitive to IPO prices, "with virtually 50% of all
IPOs year-to-date pricing below their originally anticipated
range," Bard comments. IPOs for semiconductor companies have fared
the worst so far this year.
Still, Renaissance Capital reports that IPO filings are up
fourfold to date, as the backlog reaches its highest level since
2007, indicating increased activity for both issuers and investment
The number of deals coming through is increasing, with six
companies filing last week alone,
reports Lynn Cowan for
The Wall Street Journal
. U.S. IPOs have averaged 7.2% on first-day gains so far this year
while Chinese issuers have averaged 11.7% returns. Currently, 105
IPOs are registered with the Securities and Exchange Commission,
compared to 38 in 2009.
For more information on the IPO market, visit our
First Trust IPOX-100 Index Fund (NYSEArca:
is up 9.4% in the last three months; its top holdings include
), Philip Morris (NYSE:
) and Time Warner Cable (NYSE:
); its top two sectors are consumer discretionary (35%) and
financials (19.8%); energy gets 12.7%. Technology accounts for
6.7% of the ETF.