The Alibaba (BABA) IPO is sure to be one of the largest initial public offerings in years, bringing attention to the idea of investing in initial public offerings. But how to invest in the Alibaba IPO is easier said than done.
Can the general investing public take advantage of the Alibaba IPO at all, or is it just the corporate insiders and investment bankers that profit the most?
What about ETFs or mutual funds? Can they be a good way to get exposure to the IPO market?
One of the many advantages of ETFs and mutual funds is that they are accessible to everyday investors and have great flexibility. At a reasonable entry price, mutual funds and ETF investments can provide exposure to the broad market as a whole or they can specialize in sectors.
Of course, there are dozens of mutual funds, most of which have an “aggressive growth” objective, that can invest in IPOs … but only as a small part of a larger portfolio of established growth stock companies.There are really only two ETFs and one actively-managed mutual fund that focus heavily on IPOs like Alibaba and others.
Let’s take a look at each of the three funds to see if investing in IPOs via mutual funds or ETFs is a smart bet for your portfolio, either as how to invest in the Alibaba IPO or as a way to play other high-growth opportunities.
Then, let’s talk about how to invest in IPOs: