IPO Exchange Traded Funds
IPO Exchange Traded Funds or IPO ETFs are ETFs which track stocks recently held in an Initial Public Offering (IPO). They were introduced in 2006 and are gaining popularity. IPO ETFs help investors to profit from the most expected quick growth of stocks in the initial years of public trading and from some of the companies with the highest growing potential.
The index tracked, and portfolio management of IPO ETFs vary considerably. For example the First Trust IPOX-100 tracks the IPOX-100 index, which includes 100 largest IPOs by capitalization. The index follows specific rules for including IPO stocks.
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The index tracked, and portfolio management of IPO ETFs vary considerably. For example the First Trust IPOX-100 tracks the IPOX-100 index, which includes 100 largest IPOs by capitalization. The index follows specific rules for including IPO stocks.
- The index includes only US corporations.
- A number of securities/sectors are excluded such as REITs (Real Estate Investment Trusts), CEFs (Closed Ended Funds) and ADRs (American Depository Receipts).
- To be included, the companies should have a market capitalization of at least $50 million and an IPO of at least 15% outstanding shares.
- For avoiding the high volatility/speculation of prices, the stocks are included only after seven days of public trading.
- Stocks with more than 50% gain on the first public trading day are also excluded.
- Stocks are removed from the index on their 1000th day of trading.
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posted by NobleTrading at
10:33 AM
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