First Trust Advisors is to launch a new ETF, the First Trust IPOX Europe Equity Opportunities ETF (FPXE) which will seek investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the IPOX 100 Europe Index.
The index is a market-cap weighted portfolio measuring the performance of the 100 largest and typically most liquid initial public offerings (IPOs) (including spin-offs and equity carve-outs) of companies that are economically tied to Europe, ranked quarterly by market capitalisation, in the IPOX Global Composite Index.
The fund allows investors to gain exposure to the largest and most liquid European-domiciled IPOs and spin-offs without the single stock risk of trying to pick which IPOs will be successful.
“Exposure to the IPOX 100 Europe Index provides investors with a diversified, one stop solution to access the performance of European new listings, an economically significant group of companies which often serve as a proxy for European economic growth and innovation,” says Dr Josef Schuster, CEO of IPOX Schuster LLC, the developer and provider of the index. “I believe that this unique investment approach will benefit investors seeking equity exposure outside the traditional European benchmarks.”
Because the fund will only own recent IPOs and spin-offs, there will be very little overlap with traditional index funds, which generally have a waiting period before adding them.
“Recent IPOs and spin-offs represent an important segment of the European stock market that is often absent from other European focused index ETFs. This fund provides a unique strategy for investors to gain exposure to the innovation and growth of these stocks before many are added to broad index funds,” says Ryan Issakainen, CFA, Senior Vice President, Exchange Traded Fund Strategist at First Trust.