Following the topic of interesting ETFs, today we would like to draw your attention to the FPX fund. This is an ETF from First Trust, the same provider as for the FV fund, which was discussed a couple of posts back. Why can it be interesting to a certain category of investors? Because it partly solves the problems of participating in numerous IPOs on US exchanges. Unfortunately, not at the subscription level, but at the level of already settled securities that was a fundament for trades to begin.
It means that this fund will not allow you to regularly participate in the «hot» IPO with guaranteed allocation and happily leave the papers immediately after the settlement. On the contrary, it waits until the paper is canceled at least 6 days and buys only after that. According to the investment declaration, the fund invests in the top-100 on capitalization among companies that have entered the IPO in the last 1,000 working days (this is approximately 4 years). It is rebalancing on a quarterly basis to seize new promising shares in the portfolio.
As a result, we have a well-diversified portfolio of 100 securities (with a bias, of course, to Technology, which possesses 38%), which were placed relatively recently, and from which, respectively, investors expect future-following growth. Note: in addition to the IPO, this includes spin-offs as well, when a department stands out from its large company in order to organize its own company.
The fund, it must be said, justifies expectations of investors. Since its establishment in 2006, its profitability (including management fees, which is now 0.59% per year) is 11.9% per annum, outpacing the S & P-500 index with its 8.6% per annum. Apparently, therefore, the size of the fund has grown to a quite respectable value of $ 1.2 billion. Those who are interested can read more about the fund at the source: https://bit.ly/2AYE0kS
By the way, in the line of this CC there is a similar fund for foreign (non-American) IPOs with the FPXI ticker. In its portfolio of 50 papers there are such fashionable names as Alibaba and Ferrari. But it’s still exotic that investors have not yet tried (NAV of only $ 26 million), although formally it is outpacing (6% against 5.4% per annum since launch) its own benchmark (MSCI World ex-US index) as well.