ETFs for a surging IPO market.
Chart Courtesy of StockCharts.com
Ernst & Young recently released a glowingly optimistic report on global IPO trends highlighting the growth in volume and value of IPO transactions. The report is decidedly optimistic on the IPO outlook for the remainder of the year:
"Investor confidence has been further bolstered by the predominantly solid aftermarket performance of companies that have gone public and the robust pipelines of IPO-ready businesses, indicating that there will be no shortage of opportunities in the remainder of 2014."
And while many are concerned about an overheating market, the report played down this risk:
"…despite the increase in deals, pricing has come under pressure, suggesting that investors are displaying a savvy and commendable level of caution. They are not prepared to invest in deals that are overvalued, which means that now more than ever those companies that come to market at the right time with the right growth story will attract investor interest only if they are prepared to ask the right price."
Investors can choose between a few ETFs that tap into this investment theme including private equity ETFs and IPO-specific ETFs.
Private Equity ETFs include the PowerShares Global Listed Private Equity ETF (PSP | F-54), the ProShares Global Listed Private Equity ETF (PEX | F-48), the Etracs Wells Fargo Business Company ETN (BDCS) and the U.S.-only Market Vectors BDC Income ETF (BIZD | D-98).
Meanwhile, IPO-centric ETFs include the First Trust IPO ETF (FPX | A-46) and the Renaissance IPO ETF (IPO | F-28).