The IPOX® Week, March 04, 2019

  • IPOX 100 U.S. (ETF: FPX) jumps, outpaces U.S. markets. Strong gains extend to IPOX International (ETF: FPXI), IPOX Europe (ETF: FPXE) as recent IPOs surge. U.S. yields rise.
  • Return profile characterized by big swings in individual equities after earnings. Europe’s Farfetch gains +42.67%.
  • IPO Deal-flow Review & Outlook: Global IPO market regains momentum. Tencent-backed Chinese online brokerage Futu ready for debut.

IPOX 100 U.S. (ETF: FPX) jumps, outpaces all U.S. markets. Strong gains extend to IPOX International (ETF: FPXI), IPOX Europe (ETF: FPXE) as recent IPOs surge. U.S. yields rise. Amid a jump in U.S. yields, stable risk (VIX: +0.44%) and big divergence in portfolio returns after earnings, the IPOX Indexes continued to gain last week. In the U.S., e.g., the IPOX 100 U.S. (ETF: FPX) added +1.32% to +17.87% YTD, outpacing the major U.S. benchmarks and extending the lead vs. the S&P 500 (SPX) to +603 bps. YTD. Amid more M&A by big pharma, e.g., gains in specialty holdings drove the good showing in the IPOX 100 U.S. (ETF: FPX), including 10/18 IPO biotech Guardant Health (GH US: +30.41%), e-commerce platform operator Etsy (ETSY US: +28.41%) or security software market Zscaler (ZS US: +21.68%). Friday’s plunge in cloud computing software maker Nutanix (NTNX US: -36.51%) after earnings somewhat dented positive sentiment towards the week-end. Abroad, we note another solid showing in the IPOX International (ETF: FPXI) and IPOX Europe (ETF: FPXE) which far outpaced the regional benchmarks anew, with performance driven by explosive moves in select specialty holdings including 09/18 IPO ecommerce platform operator apparel retailer London-based Farfetch (FTCH US: +42.67%) or Chinese electric car maker NIO (NIO US: +23.13%) after earnings or significant U.S. media coverage. As earnings season comes to a close, 5.01% of the weight in the IPOX 100 U.S. (ETF: FPX) is set to report this week.

IPOX® 100 U.S. Investing with the “FPX” ETF since 2006

IPOX-linked Products Performance Updates: The IPOX 100 U.S. (IPXO)-linked, 5-star $1.1 billion First Trust U.S. Equity Opportunities ETF (FPX) added +1.34% to +18.00% YTD, while the IPOX International (IPXI)-linked 5-star First Trust International Equity Opportunities ETF (FPXI) added +1.11% to +15.12% YTD and the IPOX 100 Europe (IPOE)-linked First Trust IPOX® Europe Equity Opportunities ETF (FPXE) added +1.83% to close the week at +14.29% YTD. Amongst actively managed mutual funds, the Catalyst IPOX Allocation Fund (OIPAX) rose to +16.65% YTD.

IPOX® Indexes Price Returns (%) (RT) Last Weerk 2018 2019 YTD
IPOX® Indexes: Global/International
IPOX® Global (IPGL50) (USD) 1.28 -11.37 16.95
IPOX® International (IPXI)* (USD) 1.07 -13.41 14.12
IPOX® Indexes: United States
IPOX® Comp. U.S. (IPXC)* 1.52 -7.59 17.71
IPOX® 100 U.S. (IPXO)* 1.32 -8.80 17.87
IPOX® 30 U.S. (IPXT) 1.12 -10.28 14.38
IPOX® Indexes: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) 0.85 -13.46 12.34
IPOX® Nordic (IPND) 0.77 -15.45 12.48
IPOX® 100 Europe (IPOE)* (USD) 1.55 -16.60 12.37
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) 0.53 -3.21 3.93
IPOX® China (CNI) (USD) 2.20 -22.83 21.63
IPOX® Japan (IPJP)** (JPY) 0.98 -13.70 6.37

* Basis for ETFs: FPX US, FPX LN, FPXE US, FPXU FP, FPXI US, TCIP110 IT and CME-traded e-mini IPOX® 100 U.S. Futures (IPOH9). ** Live since 07/18. Please contact [email protected] for other IPOX® Indexes.

IPO Deal-flow Review & Outlook: Global IPO market regains momentum. Tencent-backed Chinese online brokerage Futu ready for debut. Four firms debuted last week across accessible global regions, with the average (median) equally-weighted firm declining by -2.82% (-0.59%) based on the difference between the final offer price and Friday’s close. Priced far below its initial range, VC-incubated Kaleido (KLDO US: -1.53%) declined, while GIC-backed biotech startup CStone Pharmaceuticals (2616 HK: +8.17%) rose and U.S. ride sharer Lyft disclosed financial terms related to its pending IPO. Backed by Chinese internet-behemoth Tencent and VC funds Sequoia and Matrix Partners, Hong Kong-based online brokerage Futu (FHL US) is set to launch its IPO this week.

February IPO Market Recap: 20 sizable companies went public in the accessible global markets last month, a decline of 37.5% compared to 2018. With IPO deal flow affected by the U.S. government shutdown, IPOs in the U.S. still ranked on top according to both deal-count and proceeds raised as cash-hungry small biotechs led the way with 9 firms (8 biotechs) debuting, raising USD million 948. Amongst firms postponed or withdrawn, Fortress and Branson-backed high-profile Virgin Trains ranked on top. Abroad, Hong Kong saw a slowdown due to the Chinese New Year and weak aftermarket performance, yet secured 3 sizeable launches that raised USD million 725 in total, while the European IPO market remained closed amid Brexit. With a valuation of USD billion 1.5, HK-traded biopharma CStone (2616 HK) raised USD million 285, making it the largest IPO in February. Another immunotherapy firm, US-traded TCR2 Therapeutics (TCRR US), ranked as the best performer of the month with a +42.73% surge based on its 1st close.

Select IPOs traded (week: 02/25/2019) Domicile
CStone Pharmaceuticals China
Kaleido Biosciences Inc
Select IPOs expected (week: 03/04/2019) Domicile
Futu Holdings Ltd China

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