Renaissance Capital, the research and investment management firm
known for its IPO Plus Aftermarket Fund (
), this week put into motion its previously announced plan to
market an ETF that will target new initial public offerings of U.S.
The new Renaissance IPO ETF, which will be based on the firm's
own Renaissance IPO Index, will have an annual expense ratio of
0.60 percent, or $60 for each $10,000 invested. That price matches
that of the only other ETF canvassing the IPO universe, the
seven-year-old $81 million First Trust US IPO Fund
The new ETF will also undercut by more than 75 percent the cost
of Renaissance's own competing mutual fund, IPOSX, which has an
expense ratio of 2.50 percent and has accumulated about $10 million
The ETF market provides a more efficient way for investors to
gain exposure to initial public offerings than, say, seeking to get
a piece of an individual IPO through a broker. Still, IPOs are
generally considered risky, as many companies at the IPO phase of
their development are relatively small and are more volatile than
larger established companies that have longer histories as public
The Renaissance IPO Index on which the new ETF is based
comprises common stocks, depositary receipts and operating units of
newly public U.S. exchange-listed companies. These companies may
include foreign companies that are listed on a U.S. exchange.
Companies are considered to be newly public if they have completed
an IPO in the last 500 trading days, the prospectus said.
Renaissance filed for regulatory permission to offer
nearly a year ago, making clear at the time that it planned to use
its own indexes on its funds.
Renaissance's "exemptive relief" petition requested permission
to offer a broad swath of ETFs targeting U.S. and non-U.S. stocks
and bonds, and it said at the time that the Renaissance IPO ETF
would be its first fund and that it would be organized around the
Renaissance IPO Index.
Exemptive relief grants ETF firms exception to sections of the
Investment Act of 1940 and is just the first step in the path to
launching ETFs. It often takes at least six to 12 months from the
date of the initial filing for a company's first ETF to hit the
market, meaning the IPO fund will come to market roughly on
Renaissance didn't say in the regulatory paperwork what the
fund's ticker would be or on what exchange the new ETF would have
its primary listing.
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