The IPOX® Week, January 1, 2018

  • Amid mixed last week of trading, all IPOX Indexes record significant gains in 2017, outpace markets.
  • IPOX 100 U.S. (IPXO) extends its annual winning streak to Nine; AUM in underlying ETF (FPX) surge in 2017.
  • Global IPO Deal-flow Review and Outlook: Ahead of perceived strong year for IPOs, no deal flow lined up.

Amid mixed last week of trading, all IPOX Indexes record significant gains in 2017, outpace markets. Amid some profit taking towards the year-end, the diversified, style-box agnostic, all-cap momentum IPOX Indexes finished the year with significant gains, outpacing the respective markets. Top of the list ranks the IPOX International (IPXI) – underlying for the First Trust International IPO ETF (FPXI) – which added +37.80% in 2017, +1677 bps. ahead of the international market, while IPOX-style in investing in the European market with the IPOX Europe (IXTE) returned +19.27%, +1371 bps. more than when investing in the broad European market (all after dividends). Big gains extended to other world regions, such as IPOX Developed Asia-Pacific (IPTA) and IPOX China (IPXUCHCP, CNI).

IPOX 100 U.S. (IPXO) extends its annual winning streak to Nine. AUM in underlying ETF (FPX) surge in 2017. In the U.S., the IPOX 100 U.S. (IPXO) reversed somewhat lackluster 2015 and 2016 to close 2017 +26.04% higher on the year, +662 bps. more than when compared to the S&P 500 (SPX), benchmark for U.S. stocks. The Index – which serves as the underlying for the 5-star, 11-year-old First Trust U.S. Equity Opportunities ETF (FPX) – extended its annual winning streak to Nine, with fund AUM closing in on the USD billion 1 mark, a gain of +61.16% in 2017.

IPOX 100 U.S. Investing with the 5-star FPX ETF since 2006:

IPOX Price Returns (%) Last Week Q4 2017 2017
Exposure: Global/International (xUS) (USD)
IPOX Global (IPGL50) -0.08 3.53 28.59
IPOX International (IPXI)* 0.48 3.33 37.80
Exposure: United States (USD)
IPOX Composite U.S. (IPXC)* -0.64 4.57 33.64
IPOX 100 U.S. (IPXO)* -0.30 6.81 26.04
IPOX 30 U.S. (IPXT) -0.62 5.85 26.63
Exposure: Europe/Nordic Region (EUR)
IPOX Europe (IXTE) -0.25 -1.29 19.27
IPOX Nordic (IPND) 0.50 -0.62 17.91
Exposure: Asia-Pacific/China Region (USD)
IPOX Asia-Pacific (IPTA) 0.77 7.45 23.30
IPOX China C. (IPXUCHCHP)* 0.28 3.51 42.57
IPOX China (CNI) 0.82 7.67 37.67

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME listed e-mini IPOX 100 U.S. Index Futures [Symbol: IPOH8].

Global IPO Deal-flow Review and Outlook: Ahead of perceived strong year for IPOs, no deal flow lined up: Only 2 (non-China A shares and non-local India) firms commenced trading last week, adding 32.99% based on the difference between final offer and Friday’s close. Focus was on Thailand’s skin care maker and distributor Do Day Dream (DDD TB: 66.98%), recording strong initial return during its first week of trading. Ahead of what is forecast to become a strong year for global IPOs, no companies are set to start trading this week. Outside the U.S., key firms set to “go public” include Siemens (SIE GR: -1.11%) IPO/Spin-off health-care unit Healthineers, expected to become the largest European IPO since the 1996 privatization of Deutsche Telecom (DTE GY: -1.40%), energy behemoth Saudi Aramco, forecast to become the largest IPO in world history, as well as high-profile deals in Hong Kong, including Chinese mobile phone maker Xiaomi or wealth management platform operator Lufax. Deal flow in the U.S. is set to include a broad mix of firms across industries such as travel accommodation app Airbnb, ride sharing platform operator Lyft, payment processor Adyan, or U.S. life insurer AXA Equitable, a unit of French Financial AXA (CS FP: -1.75%).

Select IPOs traded (week: 12/25/2017) Country
Do Day Dream PCL Thailand
Strategic Hospitality Freehold and Leasehold REIT Thailand
Select IPOs expected (week: 01/01/2018) Country
No notable deal flow expected

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.

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