Renaissance IPO ETF

IPO

Market cap $131M

This year was supposed to be a blockbuster for tech offerings of all sizes.

This could be the year of the mega-IPO - with top Artificial Intelligence (AI) companies and SpaceX eyeing 2026 public market debuts. But the performance of past IPOs is souring, raising questions about investor enthusiasm for big deals. The MoneyShow Chart of the Day shows the performance of the Renaissance IPO Index and the S&P 500 Index over the past year. The IPO index generally tracked, or even outperformed, the S&P until September. But it has notably underperformed since then.

Last year was relatively slow for IPOs, but a string of potential trillion-dollar listings could hit in 2026. Goldman Sachs forecasts a record for IPO activity in dollar terms, while The Wall Street Journal predicts a "blockbuster year.

As dealmaking momentum builds, the U.S. IPO market may be gearing up for a comeback in 2026. ETFs like FPX, IPO, FPXI and IPOS provide a low-stress way to play the trend.

In the fourth quarter we sold four stocks (WAL, CFLT, CCOI, CIEN) and added six new investments (MIR, VCEL, AMPL, VIAV, GTLB, AAON). We exited our investment in infrastructure software vendor CFLT following the announcement that IBM would acquire the company for $11 billion, or $31 per share. We initiated a new investment position in GitLab (GTLB), a Dev/Sec/Ops software platform vendor that helps software developers plan, build, and monitor code.

With blockbuster IPOs lining up, ETFs provide a low-stress way to play the trend.

First Trust US Equity Opportunities ETF is the largest IPO/spin-off ETF with 101 stocks, eligible in their first 1,000 days after IPO. FPX has significant exposure in technology, industrials, and healthcare, but the sector breakdown may change with IPO flow. FPX has delivered superior long-term and recent returns compared to benchmarks and competitors.

Renaissance IPO ETF (IPO) is rated a buy, anticipating a surge in major IPOs through 2026 to fuel renewed investor interest. IPO's portfolio is heavily growth-oriented, with 94% SMID-cap exposure and a 42% weighting in Information Technology. Despite a high 26.9x P/E, IPO's long-term earnings growth near 32% yields a compelling PEG ratio below 2.

Eric Hippeau, Lerer Hippeau managing partner, joins 'Squawk on the Street' to discuss the massive backlog of IPOs, what he expects in 2026, AI valuations, and more.

CNBC's "The Exchange" team discusses the IPO market, Medline's trading debut and more with Dan Primack, business editor at Axios.