By Justin Spittler
Do you want to invest in IPOs, but don’t know where to start? Then today’s essay is for you.
I’m going to show you an easy, one-click way to get in on today’s most exciting IPOs without risking a penny in individual stocks.
An IPO, if you don’t know, stands for initial public offering. It’s when a company makes its debut on the stock market.
The best ones storm out of the gate like a thoroughbred horse. They can deliver much bigger returns, in much less time, than ordinary stocks.
Just look at what Roku’s (ROKU) done lately. Roku is cashing in on the cable “cord-cutting craze.” Its share price skyrocketed 1,021% in under two years.
Alteryx (AYX)—an analytics company—also had an incredible IPO. It’s surged 883% since going public in March 2017.
The same goes for Okta (OKTA)—an enterprise software company. OKTA has exploded 528% since it began trading in April 2017.
These stocks have destroyed the broad market. And you didn’t need a special connection to Wall Street to collect these profits. Any investor could have gotten in on these gains by simply buying the stock on the day of its IPO.
But you also could be beating the S&P 500 this year even if you never touched an individual IPO stock…
Type the Ticker “IPO” into Your Brokerage Account…
And you’ll see the “Renaissance IPO ETF.”
An ETF, if you aren’t familiar, is a fund that invests in a basket of stocks. The most popular ETF is SPY, which owns every stock in the S&P 500.
These days, there’s an ETF for practically everything. If you want to invest in cybersecurity, there’s HACK. If you want to invest in robot stocks, there’s ROBO.
There are ETFs for big stocks… small stocks… momentum stocks… “value stocks”… gold stocks… cannabis stocks… social media stocks… and pretty much everything you can think of.
The Renaissance IPO ETF, as you can guess, invests in companies that recently went public. It holds over 60 stocks, including big winners like Roku, MongoDB (MDB), and Americold (COLD)—a company I recommended back in July.
Thanks to big rallies by these stocks and other high-flying IPOs, the Renaissance IPO ETF has gained 22% this year… beating the S&P 500’s 19% return.
This fact might surprise the average guy who watches too much financial TV.
On TV, they go on and on about the big recent IPO flops like Uber and Lyft. But as you can see from the data… you’d have made more money buying a basket of IPOs this year than in an S&P 500 index fund.
The Renaissance IPO ETF Could Be Up a Heck of a Lot More
Like any ETF, the Renaissance IPO ETF invests in good and bad stocks. There’s no stock picker sorting out the good businesses from the bad. If a stock IPOs and meets Renaissance’s minimum size requirement, it goes into the ETF. No questions asked.
As you would imagine, some of its biggest holdings drag down performance.
Spotify (SPOT) is the fund’s biggest holding at 7.7%.
Now, Spotify is a music streaming company with an incredible product. But it’s been a lousy investment. It has inched just 3% higher this year.
Elanco Animal Health Incorporated (ELAN)—a company that sells animal health products—has also acted as dead weight.