First Trust Launches U.S. Spin-Off And IPO ETF

First Trust has launched an exchange traded fund (ETF) that tracks intial public offerings (IPOs) and company spin-offs in the U.S., its sixth fund to come to market in Europe.

The First Trust US IPO Index UCITS ETF (ticker FPX in GBP) has a base currency of USD and costs 0.65 percent per annum. It tracks an index of IPOs and spin-offs, otherwise known as public and private equity capital markets activtity and which are often seen as healthy signs of growth and innovation.

The value-weighted index measures the average performance of the 100 largest IPOs in the IPOX Global Composite Index during the first 1000 trading days. There is a cap of 10 percent per constituent, and top holdings include Facebook at 10.6 percent, pharmaceutical firm AbbVie at 10 percent and Kraft Foods Group at 4.4 percent.

Over 10 years, the ETF’s underlying index produced over 14 percent returns, while the Russell 3000 index gained just 8.1 percent over the same timeframe.

Data from Bloomberg shows that this year to 31 July, 101 deals in the U.S. have raised more than $50 million in market cap, from 77 IPOs and 24 spin-offs. The data also revealed that from 2002 to 2014, U.S. IPOS have raised more than $400 billion.

The new fund is the sixth UCITS ETF to launch in Europe from First Trust, since the provider tapped into Europe in April 2013. The previous launch was the First Trust Japan AlphaDEX UCITS ETF, which came to London on 24 June.