The Renaissance IPO Index (IPOUSA), the underlying index for Renaissance Capital’s IPO ETF (NYSE: IPO), has made a comeback since the start of the 4Q19, up 11.5% QTD compared to the S&P 500’s 6.3%. So far, the IPO Index has beaten its quarterly returns for the 2Q (+2.8%) and the 3Q (-10.8%).
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The IPO Index pulled back in the 3Q due to several disappointing debuts and growing investor caution toward highly-valued, unprofitable companies. That has led to increased pricing pressure, more modest first day returns, and better aftermarket trading QTD. IPOs in the 4Q have an average first day pop of 4.3% and an average aftermarket return of 8.6%, compared to 17.0% and -1.3%, respectively, YTD.
