Investors betting that the bad times are over for Uber Technologies Inc. after a dismal trading debut will soon be able to express their views through an exchange-traded fund.
The $40 million Renaissance IPO ETF (IPO) plans to add Uber to its holdings Friday, according to a statement from Renaissance Capital. While new companies are typically included at scheduled quarterly reviews, the fund can buy companies with at least $100 million of market capitalization as soon as five days after they start trading, said Kathleen Smith, manager of the fund.The ETF already owns Lyft.
Although Uber shares rose Tuesday, the company is down almost 16% since it started trading last week. While that’s prompted some analysts to question valuations, enthusiasm for unicorn listings is unlikely to sour given the potential rewards.
Vegan burger maker Beyond Meat Inc. soared 163% after its initial public offering, making history with the best first session for a company raising $200 million or more since at least 2008.
“Uber will put the fear of God into pricing these other IPOs, maybe making them a little more reasonable for investors to own,” Ms. Smith said.
“If you’re trying to trade names like Uber, it’s a lot safer to own a basket of them since it can be very volatile to own them individually,” she said, adding that “it’s a way for investors to get exposure without the emotional ride.”
ETF investors looking to capitalize on the recent IPO madness can pick between two funds that focus on newly public companies: Renaissance Capital’s IPO