ETFs following newly public companies are capturing the centerstage as the U.S. IPO market picks up steam. The Renaissance IPO ETF IPO, which follows U.S. IPOs that have listed during the previous three-year period, has increased over 35% in the last six months. The First Trust U.S. Equity Opportunities ETF FPX has risen more than 42% in the last six months, with the First Trust International Equity Opportunities ETF FPXI seeing 25% returns over the same period, extending exposure beyond America.
These funds are taking advantage of a market environment that is increasingly favorable towards new listings. Bespoke Investment Group noted that approximately 125 firms with market capitalizations above $500 million have IPO’d since the “AI bull market” started in October 2022. This pace has picked up in 2025, highlighting increasing demand for IPO-related strategies.
Coming on top of the momentum, Renaissance Capital points out that the IPO market is heading towards its busiest time since 2021. Year to date (as of Aug 29), IPOs have raised $23 billion, in accordance with last year, but enhanced trade clarity, a growth stock rally, and the likelihood of rate cuts are reviving IPO pipelines. The Renaissance IPO Index is up more than 17% so far in 2025, easily outsmarting the S&P 500. Renaissance currently projects that 40 to 60 IPOs may raise about $10 billion through the end of the year, with some well-known possibilities such as StubHub. On Wednesday itself, we saw Klarna Group Plc KLAR raising $1.37 Billion in US IPO.
Although investor interest has focused on technology, fintech, AI, and cryptocurrencies, the backlog cuts across a broad range of industries, from banks and biotech to restaurants and energy. That diversification may be what can continue to fuel IPO ETFs past the current cycle of growth-stock mania.
Bottom Line
Even with the optimism, IPO-focused ETFs are still volatile. New issuers tend to come out at high valuations with little operating history, so they are susceptible to drastic movements. High turnover and sector concentration, especially in tech, contribute to the risks. For instance, despite being oversubscribed 25x at the IPO, it was a 66% drop from its 2021 peak valuation of $45.6 billion, as inflation and interest rate headwinds ate into it in recent years.
IPO-themed ETFs such as IPO, FPX and FPXI are soaring as a rejuvenated listing market sees Renaissance predict the quickest deal flow in years. For tactical players wanting exposure to the next generation of growth stocks, these ETFs represent a diversified way into the IPO craze.
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