The IPOX® Week, January 3rd, 2022

  • After big 2020, most IPOX® Indexes lag in 2021, outperform other innovation-focused strategies.
  • Europe leads amongst broad-based IPOX® Indexes performance rankings in 2021.
  • Amid declines in the IPOX® SPAC (SPAC), 613 SPACs raised ca. $161.5 billion in the U.S.
  • Global IPO activity sets record with 968 deals raising $327.8 billion. Taiwan’s AES best IPO performer.

2021 Summary:  The broad-based benchmarks played catch-up to the big 2020 IPOX® Returns during 2021, underpinned by strong earnings within a low risk (VIX: -24.31%) & low interest rate environment amid big central bank and government stimulus and the global COVID-19 overhang. A sellers’ market for New Listings with plenty of liquidity driving excessive (pre-)IPO valuations and the massive sentiment shift against Chinese Tech IPOs added as additional factors suppressing stronger IPOX® Indexes returns last year. With fund returns running at +220 bps. p.a. above the ETF tracking the S&P 500 (SPY) since fund launch in 2006, e.g., the innovation focused IPOX® 100 U.S. (ETF: FPX) rose +3.70% in 2021, 2319 bps. less when compared to the S&P 500 (SPX), however, significantly outperforming other innovation focused funds. While declines across China (and Brazil) pressured the IPOX® International (ETF: FPXI) during 2021, the IPOX® 100 Europe (ETF: FPXE), which provides all-cap exposure to European-domiciled companies in unique growth industries as provided by Deal Flow, added +9.09% in 2021.  Since launch in 2018, the associated 5-star ETF (ETF: FPXE) has added ca. +3137 bps. cumulative outperformance over conventional European equity exposure. We also note gains for some of the less seasoned IPOX® Indexes Strategies, such as the newly launched IPOX® IPO M&A Index (GNDX) which focuses on capturing the performance of the burgeoning space of highly liquid firms involved in global IPO M&A.

IPOX® 100 Europe (IPOE) Investing with the “FPXE” ETF since 2018

IPOX® Portfolio Holdings in focus:  Companies involved in computer hardware manufacturing tracked in the IPOX® Sub-Sectors ranked as some of the best and most consistent individual equity performers in 2021, including IPOX® 100 Index (ETF: FPX) heavyweights IPO M&A Marvell Technologies (MRVL US: +84.62%), Dell (DELL US: +51.50%), SiTime (SITM US: +161.36%) and Allegro Microsystems (ALGM US: +35.71%). Traditional Spin-offs, including Carrier (CARR US: +45.31%), Otis (OTIS US: +30.41%), Alcon (ALC US: +32.16%) or Siemens Healthineers (SHL GY: +59.38%) also outperformed. Amid the big losses for China- (and Brazil) domiciled stocks, Saudi-linked exposure tracked in the IPOX® International (ETF: FPXI) rose strongly, including hospital operator Dr. Sulaiman Al-Habib (SULAIMAN AB: +50.63%).

Select IPOX® Indexes PRICE Returns 2019 2020 2021
IPOX® Indexes: Global/International
IPOX® Global Super Liquid (IPGL50) (USD) 27.93 66.63 -4.01
IPOX® International (IPXI) (USD) (ETF: FPXI) 31.37 72.15 -15.57
IPOX® Indexes: United States
IPOX® 100 U.S. (IPXO)* (USD) (ETF: FPX) 29.60 47.32 3.70
IPOX® IPO M&A (GNDX) * (USD) n/a n/a 9.42
IPOX® ESG (IPXT) (USD) 10.75 42.29 -0.62
IPOX® SPAC (SPAC) (USD) n/a 48.53 -16.34
IPOX® EV (IPEV) (USD) n/a 11.02 27.06
IPOX® Indexes: Europe/Nordic
IPOX® Europe (IPOE) * (USD) (ETF: FPXE) 30.97 35.14 9.09
IPOX® Nordic Core (IPND) (EUR) 38.52 59.87 20.34
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) 4.41 47.50 -9.66
IPOX® China Core (CNI) (USD) 26.31 88.02 -42.62
IPOX® Japan (IPJP) (JPY) 7.91 25.75 3.42

* Basis for CME-traded e-mini IPOX® 100 U.S. Futures (IPOH2). *Also available in UCITS format in Europe in EUR (EFPX IM), USD (IPXE LN), and GBP (FPX LN). GNDX, SPAC and IPEV returns measured since live launch on 08/13/2021, 07/30/2020 and 11/17/2020.

IPOX® SPAC INDEX (SPAC) REVIEW:  The index recorded a decline of -16.34% in 2021. 613 SPACs raised ca. $161.5 billion, more than double in both issuance number and proceeds raised when compared to 2020. With SPACs gaining +1.91% on average on their first day, respectively, 7 billion-dollar SPACs launched. 268 SPACs announced a merger target, including Lionheart Acquisition II (LCAP US: -1.19%) (with Medicaid and Medicare claims recovery specialist MSP Recovery being the largest deal in history) and Digital World Acquisition (DWAC US: +414.30%) (with Trump Media & Technology Group recording the biggest surge from any merger agreement yet). 198 SPAC’s approved business combinations include high-profile mergers such as Altimeter Group (with South-Asia super app operator Grab [GRAB US: -44.56%]) and Churchill Capital IV (with EV maker Lucid Motors [LCID US: +280.12%]). 16 SPACs terminated merger agreements and 1 SPAC liquidated in 2021.

GLOBAL Deal-flow Review and Outlook:  At least 968 non-SPAC IPOs (ex. China A-share and local India) launched in 2021, raising ca. $327.8 billion, a record in both number and volume. The average (median) equally weighted IPO rose +20.15% (+7.37%) based on the difference between its first close and final offering price. The U.S. dominated deal flow with 358 offerings (36.98%) raising ca. $154.32 billion (47.08%). U.S. EV truck maker Rivian (RIVN US: +32.94%), Chinese short-video sharing platform Kuaishou (1024 HK: -37.35%) and Korean e-commerce firm Coupang (CPNG US: -16.06%) ranked as the top three largest IPOs. Chinese micro-caps E-Home Household Service (EJH US: -67.11%) and Zhangmen Education (ZME US: -58.91%) initially rose most (but significantly declining through year-end 2021), while Taiwanese battery maker Advanced Energy Solution (6781 TT: +1086.30%) ranked as the best performer amongst all global IPOs in 2021.

Lightspeed Financial Services Group LLC is not affiliated with these third-party market commentators/educators or service providers. Data, information, and material (“content”) are provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities or contracts. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services or commentary provided by any of the market commentators/educators or service providers and any information used to execute any trading strategies are solely based on the independent analysis of the user.

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