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Dear Fellow Investor,
One of the Best Ways to Trade an IPO—Without Buying the IPO Itself
Everyone wants to hit it big with the next IPO.
From Airbnb to Facebook, many high-profile companies have delivered major early-day gains for lucky investors. And lately, the IPO market is showing signs of life again.
According to Reuters, “New listings in the U.S. have bounced back sharply in recent weeks, with some eye-popping debuts stoking hopes of a sustained revival after a dry spell since April.”
Recent debuts like Chime, Voyager Technologies, and Circle have all generated solid enthusiasm. The IPO window, once tightly shut, is beginning to crack open.
But here’s the truth: most retail investors shouldn’t be chasing IPOs on Day One.
Why Most IPOs Are Riskier Than They Look
It’s easy to get caught up in the hype around new listings. But IPOs are often volatile, unpredictable, and dominated by institutional investors before regular investors even get a chance.
What many people don’t realize is:
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IPO pricing is often inflated due to pent-up demand and limited float.
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The lock-up period (usually 90–180 days) can distort price movement.
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Insiders and early backers often cash out, which can pressure the stock.
Just ask anyone who bought Snapchat (SNAP) early and watched it tank—or who jumped on WeWork, only to see it collapse into bankruptcy.
Even IPOs that end up succeeding long term (like Meta or Uber) often dip substantially in the first few months post-listing.
That’s why one of the smartest ways to trade an IPO… is not to buy the IPO directly at all.
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Enter the IPO ETFs: A Safer, Smarter Approach
If you want IPO exposure without the single-stock risk, look no further than IPO-focused ETFs. These funds let you participate in the performance of newly public companies—without trying to pick individual winners or get access to pre-IPO pricing.
Two standout IPO ETFs are:
Let’s break them down.
ETF: First Trust US Equity Opportunities ETF (SYM: FPX)
With an expense ratio of 0.61%, FPX provides broad exposure to the 100 largest and most liquid U.S. IPOs within the first 1,000 days of trading (around 4 years). It includes companies that recently went public through traditional IPOs or spinoffs.
Since launching in 2006, FPX has shown steady long-term growth. In fact, even with some catastrophic IPO busts along the way (think SNAP, Blue Apron, or Clover Health), the fund has climbed from a 2009 low of around $11 to a recent high of $141.
That’s a 1,180% return over roughly 15 years—without the concentrated risk of single IPO bets.
What makes FPX so compelling is that it captures the collective enthusiasm surrounding IPOs. Even when a few companies flop, the broader excitement helps lift the entire portfolio.
And if IPO markets continue heating up in the second half of 2025—as many analysts believe—FPX could be one of the best long-term passive plays on the trend.
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ETF: Renaissance IPO ETF (SYM: IPO)
Another top option is the Renaissance IPO ETF (IPO). With an expense ratio of 0.60%, the fund takes a different approach.
Rather than holding all IPOs equally, Renaissance focuses on the largest, most liquid U.S.-listed newly public stocks—ones that meet strict volume and liquidity criteria. Holdings are added during the end-of-month rebalance once they’ve been trading for at least five days.
What’s more, Renaissance removes stocks after two years, ensuring the portfolio always holds “fresh” IPOs.
Here’s how Renaissance describes the strategy:
“Our approach reduces the risk of single-stock ownership while avoiding overlap with major core indices for optimal diversification across markets and time.”
Some of the ETF’s recent holdings include:
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Arm Holdings (ARM)
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Kenvue (KVUE)
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Nextracker (NXT)
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Tempus AI (TEM)
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StandardAero (SARO)
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Loar Holdings (LOAR)
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Viking Holdings (VIK)
Altogether, the IPO ETF currently holds 28 names, all of which are either recent IPOs or spinoffs making their public debut.
This ETF is ideal for investors who want to own the best and most active new listings, without needing to guess which will break out and which will fall flat.
Why Use IPO ETFs Over Buying Individual IPOs?
Here are a few advantages:
✅ Diversification – One IPO stock can flop. Twenty-five? Not likely. These ETFs let you spread your risk across multiple high-profile listings.
✅ Professional Curation – IPOs are added and removed systematically, avoiding the emotion and hype that plagues many IPO trades.
✅ Tax Efficiency – ETFs are generally more tax-efficient than trading individual stocks.
✅ Avoiding Lock-Up Drama – You don’t have to worry about insider selling or expiration of lock-up periods.
✅ Long-Term Growth Potential – IPOs often underperform in the short term but can shine over years. These ETFs let you capture the upside without the early-day chaos.
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Do you have your eye on any IPOs right now? Which ones? What sectors of the market do you think are on their way up currently? Hit "reply" to this email and let us know your thoughts!
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