IPOs really want to show their value, as the market, in this week alone, saw 18 different companies make their Wall Street debuts. Joining the “ETF Report” with hosts Alexis Christoforous and Kristin Myerson on Yahoo Finance, ETF Trends CIO and Director of Research Dave Nadig discusses what the demand for IPO-related ETFs has been like.
As Nadig explains, it’s not quite what some may expect, though the pace of new IPOs is the highest since 1998/99. With that in mind, the companies are all over the map. The 18 companies are billion-dollar businesses instead of young upstart growth companies many may think of by default.
A few IPO ETFs and SPAC ETFs are worth noting, though none of them have pulled in huge assets so far this year, especially as compared to 2020 when “SPAC fever” started to take hold. With that said, some funds have started to incorporate IPOs when they are part of a relevant sector or approach.
As Nadig states, “while the IPO ETFs themselves may not be getting much traction, they are showing up in a lot of ETFs.”
All of that in mind, IPOs aren’t going away. Another 90 are still sitting out there, putting things on target for the biggest year ever in IPOs.
“We are at this historic level of IPOs coming to market,” @ETFtrends CIO and Dir. of Research @DaveNadig says. “But I think it’s important to recognize these IPOs are all over the map. 18 of those IPOs are billion-dollar companies — hardly the scrappy upstart growth companies.” pic.twitter.com/W0NQmKpNDk
— Yahoo Finance (@YahooFinance) July 2, 2021
A Mid-Year Check-In
Taking a look at what to expect in the rest of the year and what sectors investors should be looking into, Nadig notes that the important thing to look at is how to solve the income problem and manage risk. It remains the largest concern of many investors. With that in mind, there’s a lot of interest in financials and, more recently, real estate. With headlines highlighting the money coming in for real estate, the big uptick has affected the real estate ETFs.
As far as themes to take a look at, Nadig has some things in mind, including infrastructure, which may actually be winding down. With that said, there’s also a lot of economic data and consumer sentiment geared toward things like space ETFs and areas of raw innovation.
Additionally, a lot of next-generation stocks are booming, as well as the interest in areas that tapered off when the pandemic started. Sectors like biotech and work-from-home stocks are great areas to keep in mind.
Looking to which ETFs are generating a lot of interest, Nadig points to funds that are tracking the decentralized finance space. The VanEck Vectors Digital Transformation ETF (DAPP) and the Bitwise Crypto Industry Innovators ETF (BITQ) are tracking companies in the cryptocurrency space.
As a centralized figure in the whole crypto argument, Nadig adds that “I think that equity space is a pretty solid way to get exposure and is definitely where people have been looking for growth.”
For more market trends, visit ETF Trends.