The Renaissance IPO ETF (NYSEArca: IPO), which has risen to acclaim in recent weeks for being among the ETFs with the largest weight to Alibaba (NYSE: BABA) gets an international cousin today with the debut of the Renaissance International IPO ETF (NYSEArca: IPOS).
IPOS tracks the Renaissance International IPO Index, meaning that like IPO, the new ETF will be a cap-weighted fund. There will be no overlap in holdings between the two ETFs, meaning that well-known China IPOs such as Alibaba and JD.com (NasdaqGS: JD), which reside in IPO, will not be found in the new ETF. IPOS’ benchmark comes courtesy of the FTSE Group
IPO was the second ETF to add Alibaba after the company’s Sept. 19 initial public offering, doing so five days after the company came public. Alibaba is now IPO’s second-largest holding at 9.62%, just behind the 10.17% the ETF allocates to Twitter (NYSE: TWTR). That is by far the largest allocation to Alibaba among ETF’s that currently hold the stock. [A True Alibaba ETF]
Even when excluding Alibaba, the third quarter was the best quarter in four years for initial public offerings.
“The launch of the Renaissance International IPO ETF responds to investor demand for systematic exposure to newly listed IPOs in a low‐cost tax‐efficient exchange traded structure,” said Kathleen Smith, Chairman of Renaissance Capital, in a statement. “When added to core equity holdings, this portfolio of new equities provides investors with unique returns and more complete coverage of the full set of public equities. The Renaissance International IPO ETF when coupled with the Renaissance IPO ETF provides investors with access to the entire global IPO market.”
Like IPO, IPOS has the ability to add “sizable new companies on the fifth day of trading and the rest on scheduled quarterly reviews. Companies are removed after two years when the they become seasoned stocks,” according to Renaissance Capital.
The U.K. is the largest country weight in IPOS at 20.6% followed by Japan at 11.5% and China at 11%, according to issuer data. The other three BRIC nations, Brazil, Russia and India combine for 8.8% of the ETF’s weight.
The largest individual holding in IPOS’ is Brazil’s BB Seguridade Participacoes with a weight of 5.13%. None of the other 100 holdings in the ETF had a weight of more than 4.7% as of Oct. 3.
First Trust, which sponsor’s IPO’s main competitor, the First Trust US IPO Index Fund (NYSEArca: FPX), is expected to launch the First Trust International IPO ETF on the NASDAQ Stock Market under the ticker “FPXI” in the coming days.
Renaissance IPO ETF
ETF Trends editorial team contributed to this post.