First Trust’s US IPO ETF reaches $1bn AUM

Jan 15th, 2018 | By | Category: Equities

The First Trust US Equity Opportunities ETF (FPX US) has reached over $1 billion in assets under management (AUM). Formerly known as the First Trust US IPO Index ETF, FPX provides exposure to US equities recently listed by way of an initial public offering or spin-off from an existing company.

Dr. Josef Schuster, CEO of IPOX Schuster

Dr. Josef Schuster, CEO of IPOX Schuster.

The fund tracks the IPOX 100 US Index, composed of the 100 largest US stocks in the parent IPOX Global Composite Index.

Equities enter the parent index on their sixth trading day and exit 1000 trading days (four years) thereafter.

The entry point is timed to avoid the increased volatility often seen in the first few days of IPO trading, while the four year exit mark is the result of extensive back-testing analysis that showed to be the optimal holding period.

According to IPOX Schuster, the firm behind the innovative index, this methodology tilts toward mid- and large-cap stocks and has historically captured approximately 85% of total market capitalization created through US IPO activity.

The $1bn milestone is a function of the fund’s long track record and persistent outperformance. Between 12 April 2006 (the fund’s inception) and 29 December 2017, it has achieved an average annual total return of 12.0%, outperforming the overall US equity market as measured by the S&P 500 and Russell 3000 indices (both of which produced an 8.7% average annual total return).

Ryan Issakainen, senior vice president, ETF strategist at First Trust, commented, “Over the years, FPX has benefitted from its exposure to the innovation and growth of many recently issued stocks, long before they were added to traditional index funds. We believe this unique strategy’s focus on recent IPOs and spin-offs is an important key to its success.”

Dr. Josef Schuster, CEO of IPOX Schuster, added, “Exposure to the IPOX 100 US Index provides investors with a diversified, one-stop solution to access the performance of the largest and typically best performing US IPOs and spin-offs, an economically significant group of companies which often serve as a proxy for economic growth and innovation. We are confident that the unique investment approach we have pioneered will continue to benefit investors seeking equity exposure outside the traditional benchmarks.”

FPX is listed on NYSE Arca and has a total expense ratio (TER) of 0.60%.

A UCITS-compliant version of the fund is available in Europe, namely the First Trust US IPO Index UCITS ETF (FPX LN) listed on London Stock Exchange. It has $6.5m in AUM and a TER of 0.65%. [See First Trust’s US IPO ETF proves a persistent outperformer]

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