The ARK Next Generation Internet ETF (ARKW) is an actively managed fund with a broad mandate to inve...
Renaissance: An ETF that Eyes IPOs
08/05/2019 5:00 am EST
It doesn’t buy stakes in private companies in the lead up to their IPO. Instead, it looks at companies in the days immediately following their IPO to gauge whether they raised at least $100 million and have sufficient liquidity to be easily traded. If they do, they can be added to the fund within five days of going public.
On top of that, every quarter the fund screens companies that have gone public in the last 500 trading days to determine if they meet its inclusion criteria, in which case they could still be added. The positions are then sold after two years or when they no longer meet the inclusion criteria.
True, the strategy does leave some meat on the bone. But it also helps minimize the impact of any flops on the portfolio. And there are still plenty of potentially big IPOs to come.
Renaissance IPO ETF is heavily weighted with tech stocks (55.8% of its portfolio) and its top five holdings are: Spotify Technology (SPOT), 9.50% of assets; Elanco Animal Health (ELAN), 6.82%; VICI Properties (VICI), 4.99%; and Uber Technologies (UBER), 4.61%.
Aramco, the Saudi Arabian oil company, is still planning to IPO sometime this year. The world’s most profitable company is reportedly looking for a $2 trillion valuation (that seems unlikely, but it’s an impressive number).
Then there’s Airbnb, which said it generated “substantially more” than $1 billion in the third quarter of 2018 alone, or Peloton, maker of high-end exercycles and treadmills. Or, one of my personal favorites — Robinhood — a free stock trading app, or Casper, the mail order mattress company.
So, if you’ve missed out on the hottest IPOs of the year, just by adding Renaissance IPO ETF to your portfolio, you won’t miss out on the rest.
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