Another issue facing Alibaba’s inclusion in indices used by ETFs is how index providers will classify the stock: As a consumer discretionary or technology company. Some index providers have already expressed they will add Alibaba to tech-focused indices if the company meets with a discretionary classification. [Alibaba Will Join This ETF]
Smith said IPO will likely treat Alibaba as a consumer discretionary stock, which is pivotal when considering the comparisons of Alibaba to Amazon (NasdaqGS: AMZN). Thing is Alibaba has an EBITDA margin of 57.8% compared to 6.9% for Amazon.
Alibaba does have game-changing potential for an ETF like IPO, but it is not the only ace up the sleeve of Renaissance Capital. IPO, which is up 4.1% over the past 90 days compared to a roughly 3% for the S&P 500, is soon to get a cousin. [Facts Behind IPO ETFs]
Renaissance Capital has filed plans for the Renaissance Capital International IPO ETF. That ETF, with a launch date that though not specific can be characterized as imminent, will provide investors with an avenue to tap into IPO listed outside the U.S., nearly three-quarters of which will hail from developed markets.
Renaissance IPO ETF
