Amid jump in volatility (VIX: +46.08%) ahead of expiration, select IPOX Indexes record relative strength. The IPOX Indexes traded mixed last week with the IPOX Global 30 (IPGL30) – benchmark for the performance of the largest and most liquid global IPOs and Spin-offs during the past 4 years – declining by -0.56% to +2.84% YTD, ahead on the world benchmark. Amid broad selling pressure towards the week-end, the mixed relative performance picture extended to the IPOX Regional Indexes level: For example, while the IPOX U.S. Indexes (IPXC, IPXT, IPXO) traded broadly line with the U.S. market benchmarks, IPOX Indexes providing exposure to International Markets (IPXI), Europe (IXTE, IPND), Asia-Pacific (IPTA) and China (CNI, IPXUCHCP) (IPXUCHCP, CNI) outperformed.
IPOX-linked funds in focus: FPX, FPXI, OIPAX. Linked to the IPOX 100 U.S. Index (IPXO), the 5-star, 10-year First Trust IPOX 100 U.S. ETF (FPX) declined to +3.77% YTD last week, in line with the U.S. benchmarks, while the First Trust IPOX International ETF (FPXI) fell to +0.74% YTD and the IPOX-linked Catalyst IPOX Allocation Fund (OIPAX), an actively managed mutual fund, fell to +11.35% YTD. In IPOX U.S., individual stocks in focus were firms which had recently announced disappointing earnings including industrial HD Supply (HDS US: -16.97%), food wholesaler Performance Food Group (PFGC US: -9.22%) and entertainment firm Dave & Buster (PLAY US: -9.10%), while oil and gas explorer Antero Resources (AR US: +4.59%), IT services provider SAIC (SAIC US: +3.74%) or optical products maker Lumentum Holdings (LITE US: +3.38%) traded to the upside. In markets outside the U.S., we note last week’s surge in Chinese Financials, including IPOX heavyweights Cheung Kong Property Holdings (1113 HK: +6.76%), Peoples Insurance Company of China (1339 HK: +6.25%) or utility CGN Power (1816 HK: +6.06%).
Asset Allocation benefits of U.S. IPO and Spin-Off Investing with the IPOX 100 U.S. ETF (FPX) since 2006:
|IPOX Returns (%) (P)||Week||2015||YTD 16|
|Exposure: Global/International (xUS) (USD)|
|IPOX Global 50 (IPGL50)||-0.69||0.99||-1.45|
|IPOX Global 30 (IPGL30)||-0.56||-0.96||2.84|
|IPOX Intern. (IPXI)*||0.42||-5.85||-0.29|
|Exposure: United States (USD)|
|IPOX US Composite (IPXC)||-1.67||-3.90||7.45|
|IPOX 100 U.S. (IPXO)*||-2.50||1.57||3.19|
|IPOX 30 U.S. (IPXT)||-2.39||4.91||4.17|
|Exposure: Europe (EUR)|
|IPOX Europe (IXTE)||-0.69||14.41||-4.90|
|IPOX Nordic (IPND)||0.16||23.88||0.80|
|Exposure: Asia-Pacific (Developed) (USD)|
|IPOX Asia-Pacific (IPTA)||3.13||-2.32||4.47|
|Exposure: China (USD) (x A-Shares)|
|IPOX China C. (IPXUCHCHP)||2.11||-14.45||4.44|
|IPOX China (CNI)||3.30||-9.10||-2.69|
The wait is over: IPOs line up for trading debut. At least 7 notable IPOs/Spin-offs are lined up to debut across the global regions this week, with focus on deals set for trading in the U.S. Top of the list is Bermuda-based P/E-backed wealth manager Bank of NT Butterfied & Sons (NTB US), followed by high-yielding energy firm Noble Midstream (NBLX US) and regional bank group TN-based FB Financial (FBK US). Focus in Europe is on EON Spin-off utility network Uniper (UN01 GR) which is expected to start trading Monday, while small-cap food supplement retailer Ausupreme (2031 HK) is set to commence trading in H.K.
|IPOs (week of Sep. 5):||Ticker||Return (%)|
|No significant accessible deal flow traded.|
|IPOs (week of Sep. 12):||Ticker||Sector|
|Ausupreme International||2031 HK||C. Discretionary|
|Bank of NT Butterfield & Son||NTB US||Financials|
|CROSSTEC Group Holdings||3893 HK||Industrials|
|Everbridge Inc||EVBG US||Info Technology|
|FB Financial Corp||FBK US||Financials|
|Noble Midstream Partners||NBLX US||Energy|
|Uniper SE||UN01 GR||Energy|
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.
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