Amex Launches Fund That Tracks IPOs
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The American Stock Exchange on Thursday launched the first exchange-traded fund that tracks U.S. initial public stock offerings.
The First Trust IPOX-100 index fund consists of the 100 largest companies in the U.S. IPOX composite index, which includes 447 companies whose shares were recently offered to the public for the first time. Stocks are eligible to be included from their seventh to 1,000th day of trading.
The developers say the time span will help capture the longer-term performance of companies that go public and offer a more accurate view of the returns most investors get.
To be included, a company must have a market value of more than $50 million after its first day of trading, must have at least 15% of its shares in public hands, and can’t have risen more than 50% above its offering price on the first trading day.
“We tend to be kind of skeptical of IPOs for the most part because companies don’t go public when they’re cheap,” said Douglas Lovett, who tracks IPOs at Standard & Poor’s. “They’re taking advantage of a strong market in their industry, which generally won’t last forever.”
The IPOX-100 trades under the symbol FPX. It closed at $20.10 on Thursday.
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