February 27, 2008 at 2:00 pm by Tom Lydon
Visa is readying to take the plunge and go public - does this mean it could be making an appearance in the IPO exchange traded fund (ETF)?
This IPO is coming at an interesting time for the financial markets, says Eric Dash for the New York Times. The nation’s largest credit card network, however, doesn’t seem to be daunted as it prepares to sell as much as $17.1 billion of stock in late March.
Visa, and its rival, MasterCard, have been thriving as Americans bust out the plastic to pay for nearly everything. And the financial crunch hasn’t been hurting them because they don’t actually make the loans - they just process the transactions for the banks that do. The IPO could actually help its member banks, because it will generate a windfall for them if everything goes according to plan.
Since Visa’s IPO is the largest-ever, could the IPO-tracking ETF, U.S. IPOX 100 Index Fund (FPX), soon be adding the company to its rotation after the initial rush? The fund could surely use a boost: it’s down 10.2% year-to-date.
FPX is designed to measure the 100 top IPOs in the United States, measuring their performance by market cap and rebalancing quarterly. They’re added to the index on their seventh day of trading and bumped out on the 1,000th day.
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