Want to play the IPO market without making individual picks? Well, there’s some help: You can buy shares in a new exchange-traded fund (ETF) called Renaissance IPO ETF (IPO).
Now, this does not mean you get a chance to snag hot deals at the offering prices. The IPO ETF is only invested in companies that have already pulled off their deals.
As for the IPO ETF, it has the advantage of smart money managers. Keep in mind that Renaissance Capital has provided institutional research on public offerings since 1991 (by the way, the firm also has a pretty useful website called IPOHome.com).
The IPO ETF keeps a holding for no longer than two years after the deal hits the market, and the market value is limited to no more than 10% of the overall assets. As for the expense ratio, it is about 0.60%. Current holdings include well-known firms like Facebook (FB), Splunk (SPLK), Michael Kors (KORS) and Workday (WDAY).
No doubt, the IPO market can be risky (although, at the IPO Playbook, we try to help make things easier!). So again, for investors who want some exposure to the market — but who don’t have the time to engage in the spade-work — the IPO ETF is certainly a good alternative.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.