IPOX U.S. 100 (IPXO), IPOX Europe (IXTE) record strong gains into Q1-end. Select IPOX Indexes recorded further gains on the last week of the quarter to close at or near record highs, after the benchmarks – including U.S. small-caps as measured by the Russell 2000 (RUT) – recovered from the big selling early in the week, driven by the U.S. government’s failure to repeal Obamacare. This most notably included the IPOX 100 U.S. (IPXO) and IPOX Europe (IXTE) which both also outpaced their benchmarks. In the IPOX 100 U.S. (IPXO), individual exposure in focus included specialty chemicals makers The Chemours Company (CC US: +12.74%), biotech Bioverativ (BIVV US: +8.27%) or oil and gas explorer RSP Permian (RSPP US: +7.19%), while IT Services provider SAIC (SAIC US: -13.58%) sank after providing weak guidance. In all 75/100 holdings in the IPOX 100 U.S. Index (IPXO) portfolio rose on the week, with the average (median) stock gaining +1.66% (+1.41%), more than when compared to the applied market-cap weighted index. Gains in Italian luxury car maker Ferrari (RACE IM: +5.52% [after upgrades]), UK medical services provider Convatec (CTEC LN: +5.36%) or Bayer-Spin-off Covestro (1COV GY: +5.27%) propelled the IPOX Europe (IXTE) to another big week, with the index closing the week at a multi-year high.
All IPOX Indexes beat benchmarks during Q1 2017. Amid the big rally in global stocks during the quarter, all of the IPOX Indexes rose on the quarter and surpassed the performance of the respective benchmarks. Top of the list ranked the IPOX International (IPXI) which jumped +11.49% during Q1, a massive +543 bps. more than when compared to its benchmark.
|IPOX Price Returns (%)||Last Week||Q1 2017||2017 YTD|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global (IPGL50)||-0.14||8.33||8.33|
|IPOX International (IPXI)*||-0.58||11.49||11.49|
|Exposure: United States|
|IPOX Composite U.S. (IPXC)*||1.17||9.26||9.26|
|IPOX 100 U.S. (IPXO)*||1.04||6.12||6.12|
|IPOX 30 U.S. (IPXT)||0.65||5.90||5.90|
|Exposure: Europe/Nordic Region|
|IPOX Europe (IXTE)||1.78||9.03||9.03|
|IPOX Nordic (IPND)||0.45||3.84||3.84|
|Exposure: Asia-Pacific/China Region|
|IPOX Asia-Pacific (IPTA)||-1.42||8.32||8.32|
|IPOX China C. (IPXUCHCHP)*||-1.43||11.44||11.44|
|IPOX China (CNI)||-2.12||11.52||11.52|
* Basis for Exchange-Traded Products (e.g. FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT) and CME Futures (e-mini IPOX 100 U.S. Index Futures [commodity trading symbol: IPOH7]).
IPOX-linked AUM jump in Q1, products record gains: Amid brisk activity in the global New Listings Market, select IPOX-linked investment products recorded strong gains during Q1, while AUM jumped. For example, AUMs linked to the IPOX-linked, 5-star, 10-year old First Trust U.S. Equity Opportunity ETF (FPX) rose to USD million 697, while the ETF gained +6.29% during Q1 and the First Trust International IPO ETF (FPXI) rose +12.50% during Q1. The Catalyst IPOX Allocation Fund (OIPAX), an active mutual fund, gained +5.18% during Q1.
Strong appetite for global IPOs set to continue in second quarter. At least 6 notable global IPOs (non China-A shares) commenced trading last week with the average (median) IPO gaining +5.90% (0.58%) based on the difference between the final offering price and the week’s close. While deals in the U.S. were absent during last week, a number of respective IPOs are set to commence trading during the upcoming week. Amid big YTD declines in incumbent ‘10 IPO Swift Transportation (SWFT US), top of the list ranks WI-based transportation and logistics services provider Schneider National (SNDR), followed by energy firm Hess Midstream Partners LP (HESM US). More growth-focused deals lined up are application software maker Okta (OKTA US) and online lender Elevate Credit (ELVT US). European specialty deals include Swedish fitness club operator Actic Group (ATIC SS), Norway-based cancer treatment maker Bergenbio (BGBIO NO), Italian consumer electronics retailer Unieuro (UNIR IM) and X-Fab Silicon Foundries SE (XFAB FP), a Belgium-based manufacturer of silicon wafers.
|Traded IPOs (week of 03/27/2017)||Country|
|Chanhigh Holdings Ltd||China|
|Luzhou Xinglu Water Group Co Ltd||China|
|Neinor Homes SLU||Spain|
|Pembury Lifestyle Group||South Africa|
|Upcoming IPOs (week of 04/03/2017)||Country|
|Actic Group AB||Sweden|
|Elevate Credit Inc||United States|
|Hess Midstream Partners LP||United States|
|Kunming Dianchi Water Treatment Co Ltd||China|
|Milestone Builder Holdings Ltd||Hong Kong|
|Okta Inc||United States|
|Schneider National Inc||United States|
|X-Fab Silicon Foundries SE||Belgium|
Josef Schuster is the founder of IPOX Schuster LLC (www.ipoxschuster.com), a Chicago-based Financial Services company specialized in Financial Products Design related to Initial Public Offerings and corporate Spin-offs. He is the chief architect of the IPOX Indexes, a global index group initiated in 2004 that encompasses an index technology allowing for asset-allocation focused exposure to the “going public” effect associated with global IPOs and Spin-offs. Mr. Schuster earned his Bachelor of Arts degree in Business Administration in 1994 from the European Business School, London. Mr. Schuster was also awarded a MSc in Accounting and Finance in August 1996 and a MPhil / PhD in Accounting and Finance in June 2003 from the London School of Economics.
ABOUT THE IPOX INDEXES: Through the range of the IPOX Indexes, market participants have an innovative opportunity to navigate the global IPO and Spin-off market and to track the performance of this economically significant sector more accurately and comprehensively than with any other index group. The IPOX Indexes accomplish the systematic indexation of the aftermarket performance of the IPO and Spin-off sector, while – at the same time – preserving the benefits of diversification. Linked to the IPOX 100 U.S. Index, for example, IPOX-linked investment products available to investors include the pioneering USD million 600, 5-star First Trust U.S. IPO ETF (ticker: FPX). On February 18, 2016, CME Group, the world’s largest exchange operator, launched e-mini IPOX 100 U.S. Index Futures, offering market participants for the first time a tool to manage the aggregate risk associated with U.S. IPOs and Spin-offs.
Disclosure: the author has no position in the stocks mentioned.
This article is provided for educational purposes only and is not considered to be a recommendation or endorsement of any trading strategy. The author is not affiliated with Lightspeed Trading and the content and perspective is solely attributed to the author.