The IPOX® Week, May 13, 2019

  • IPOX  100 U.S. (ETF: FPX) dodges most of the big downside recorded by U.S. equity benchmarks on strong earnings.
  • Big relative strength extends to IPOX 100 Europe (ETF: FPXE).
  • IPO Deal-flow Review & Outlook: Uber (UBER US) investors leave USD million 617 “on the table” by not buying on the first close. PIMCO Mortgage REIT (PMTG US), Avantor (AVTR US) set to kick off another busy week for U.S. IPOs.

IPOX  100 U.S. (ETF: FPX) dodges most of the big downside recorded by U.S. equity benchmarks on strong earnings. Ahead of May option expiration week, the key IPOX Indexes finished the week categorized by a) huge sentiment-driven swings in global equities (VIX: +24.63%) and b) lower U.S. yields driven by trade uncertainty on top of the weekly global equities performance rankings. In the U.S., e.g., the FANG-free, diversified, large-cap centric IPOX 100 U.S. (ETF: FPX) fell just -0.98% to +22.45% YTD, extending the YTD relative performance jump vs. the S&P 500 (SPX) – benchmark for U.S. stocks – by +120 bps. to a large +751 bps. YTD. Relative strength extended to the IPOX 100 Europe (ETF: FPXE) which declined by just -0.55% to +15.58% YTD, extended its YTD performance lead vs. the European market by a massive +255 bps. to +585 bps YTD.  Earnings & corporate actions drove the good relative showing, including enabled devices maker Roku (ROKU US: +27.27%), software maker Atlassian (TEAM US: +16.72%), Spin-off M&A pharma maker Takeda (TAK US: +7.79%), German real estate play Vonovia (VNA GY: +6.67%) or Italian luxury car maker Ferrari (RACE US: +5.36%). Disappointing results by mostly high-beta momentum IPOs including application software maker Sailpoint (SAIL US: -30.74%), chemicals maker Spin-off Covestro (1COV GY: -9.27%) and German chip maker Siltronic (WAF GY: -8.22%) weighted on portfolio returns.

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

Performance Update for IPOX-linked Funds: Amid the gyrations in the global benchmarks, the IPOX 100 U.S. (IPXO)-linked, 5-star (10-years) $1.2 billion First Trust U.S. Equity Opportunities ETF (FPX) declined by -0.96% to close at +22.69% YTD, while the IPOX International (IPXI)-linked 4-star (3-years) First Trust International Equity Opportunities ETF (FPXI) and the IPOX 100 Europe (IPOE)-linked First Trust IPOX® Europe Equity Opportunities ETF (FPXE) closed the week at +15.84% YTD and +18.70% YTD, respectively. Amongst actively managed IPOX-linked funds, the Catalyst IPOX® Allocation Fund (OIPAX) – a 2019 Thomson Lipper Award Winner – finished at +21.33% YTD.

Select IPOX® Indexes Price Returns (%) Last Week 2018 2019 YTD
IPOX® Indexes: Global/International
IPOX® Global (IPGL50) (USD) -1.37 -11.37 19.21
IPOX® International (IPXI)* (USD) -1.87 -13.41 13.81
IPOX® Indexes: United States
IPOX® Composite U.S. (IPXC)* -2.29 -7.59 16.93
IPOX® 100 U.S. (IPXO)* -0.98 -8.80 22.45
IPOX® 30 U.S. (IPXT) -1.18 -10.28 17.79
IPOX® Indexes: Europe/Nordic
IPOX® 30 Europe (IXTE) (EUR) -1.31 -13.46 16.70
IPOX® Nordic (IPND) -1.27 -15.45 16.99
IPOX® 100 Europe (IPOE)* (USD) -0.55 -16.60 15.58
IPOX® Indexes: Asia-Pacific/China
IPOX® Asia-Pacific (IPTA) (USD) 1.07 -3.21 2.66
IPOX® China (CNI) (USD) -5.85 -22.83 10.82
IPOX® Japan (IPJP)** (JPY) -1.22 -13.70 2.92

* 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 (IPOM9). ** Live since 07/18. Please contact [email protected] for other IPOX® Indexes.

IPO Deal-flow Review & Outlook: Uber (UBER US) investors leave USD million 617 “on the table” by not buying on the first close. Mortgage REIT (PMTG US), Avantor (AVTR US) set to kick off another busy week for U.S. IPOs. At least 18 firms debuted last week, with the average (median) equally weighted stock adding +7.38% (+3.68%) based on the difference between the final offering price and Friday’s close. Highly anticipated ride sharing platform operator Uber (UBER US: -7.16%) flopped on its debut amid investor doubts and volatile markets, leaving syndicate IPO investors with a cumulative loss of USD million 617, while Cambridge, MA-based liver diseases focused biotech Axcella (AXLA US: -30.40%) also dropped significantly. Strong gains were recorded by IT services provider Parsons (PSN US: +14.85%), Russian recruitment platform HeadHunter (HHR US: +24.07%), microcap Chinese online lending platform Jiayin (JFIN US: +53.81%) and Alzheimer’s treatment developer Cortexyme (CRTX US: +40.35%). Abroad, the largest tech IPO in Australia – U.S. family tracking app operator Life360 (360 AU: +10.86%) – also celebrated a successful first week of listing. Deals lined up for this week include REIT PIMCO Mortgage Income (PMTG US), Private Equity-backed chemical manufacturer and lab equipment supplier PA-based Avantor (AVTR US), infrastructure software maker CA-based Fastly (FSLY US), as well as Starbucks’ (SBUX US: +0.95%) Chinese rival Luckin Coffee (LK US). We note that workplace communication app Slack (SK US) is also set to commence its roadshow for its upcoming direct listing this week.

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