Markets held a steady upward trajectory for most of the third quarter, as volatility remained in check, inflation continued to show signs of easing, and the Fed approved a rate cut in September. The initial public offering (IPO) window fully reopened in Q3 amid renewed interest in growth stocks and surging demand for new issues. Global benchmarks performed well overall, though talk of an AI bubble and concerns ahead of a government shutdown in the US led to some backtracking in domestic equities near quarter end. As a result, the Renaissance International IPO ETF delivered stronger trading than the Renaissance IPO ETF, though both outperformed broader market benchmarks as growth stocks came back into focus.
Performance Snapshot
Below we highlight third quarter performance of the Renaissance IPO ETF (NYSE: IPO) and the Renaissance International IPO ETF (NYSE: IPOS). We frame this against the performance of the SPDR S&P 500 ETF Trust (SPY) and the iShares MSCI ACWI ex US ETF (ACWX), respectively, as well as the IPO ETFs’ underlying indices, the Renaissance IPO Index (IPOUSA) and the Renaissance International IPO Index (IPOXUS).
Source: Renaissance Capital, based on data from Yahoo Finance as of 9/30/25. Figures for the quarter ended 9/30/25. Standard deviation reflects the standard deviation of daily returns during the quarter. Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. For the most recent quarter end performance for the fund, please click here (IPO) (IPOS).
All funds are managed differently and do not react the same to economic or market events. This article does not aim to make direct fund-to-fund comparisons. The investment objectives, strategies, policies, or restrictions of other funds may differ and more information can be found in their respective prospectuses. Therefore, we generally do not believe it is possible to make direct fund to fund comparisons in an effort to highlight the benefits of a fund versus another similarly managed fund.
IPO ETFs vs. Market Benchmarks: Both IPO ETFs Outperform, but International IPO ETF Shines
The Renaissance IPO ETF returned +10.6% in Q3, outpacing the SPDR S&P 500 ETF Trust, which returned +8.1%. The IPO ETF and the S&P 500 both benefited from favorable trends in the overall market, namely continued enthusiasm in the AI space, though renewed interest in growth stocks and demand for new issues were key tailwinds for the IPO ETF, given its focus on new stocks and concentration in fast-growing sectors. This resulted in a 2.5 percentage point excess return in the IPO ETF. That said, talk of an AI bubble and concerns about a US government shutdown weighed on performance near quarter end, particularly in the IPO ETF.
The Renaissance International IPO ETF returned +19.3% in Q3, strongly outperforming the iShares MSCI ACWI ex US ETF, which returned +6.7%. Performance in both the International IPO ETF and the ACWI ex US ETF reflected solid trading in Asian markets, particularly Hong Kong and Japan, as well as modest overall trading in Europe. However, the International IPO ETF was boosted primarily by individual winners, including a few new stocks in these markets that aren’t currently included in ACWI ex US ETF. This resulted in a 12.7 percentage point excess return in the International IPO ETF.
The IPO ETFs’ outperformance came with higher volatility, evidenced by higher standard deviation of daily returns during the quarter compared to the broader market benchmarks (1.4% for IPO vs. 0.5% for SPY; 0.9% for IPOS vs. 0.6% for ACWX). However, their differentiated exposure can complement broad-market strategies by capturing a distinct segment of public equities in US and international markets.
IPO ETFs vs. IPO Indices: Outcomes of Replicating Index Performance
The Renaissance IPO ETF seeks to replicate the performance of the Renaissance IPO Index, which captures newly public US-listed companies. In Q3, the IPO ETF returned +10.6%, compared to a +10.6% return for the IPO Index. The modest tracking difference of +0.06% is consistent with expectations for a passive strategy and reflects the impact of management fees, corporate actions and rebalance timing, and cash drag, the latter of which had a positive rather than negative effect as it provided a buffer against poor trading near quarter end.
The Renaissance International IPO ETF seeks to replicate the performance of the Renaissance International IPO Index, which captures newly public internationally-listed companies. In Q3, the International IPO ETF returned +19.3%, compared to an +20.1% return for the International IPO Index. The moderate tracking difference of -0.81% reflects the expectations for a passive strategy listed above, particularly cash drag during the quarter, as well as normal challenges associated with trading in international markets.
Both funds continued to provide accurate exposure to the indices’ core holdings, offering investors efficient access to the new stock asset class in both US and international markets.
Attribution Highlights
Top contributors in the Renaissance IPO ETF were led by companies with strong AI angles, namely chipmaker Astera Labs and social media platform Reddit. The biggest detractors included consumer health company Kenvue and restaurant chain CAVA. In its third quarterly rebalance of the year, five names were added to the IPO ETF, including web design software firm Figma and stablecoin issuer Circle.
Top contributors in the Renaissance International IPO ETF included Japanese miner JX Advanced Metals and Chinese AI chipmaker Horizon Robotics. The biggest detractors were Indonesian gold miner Amman Mineral and Chinese jewelry retailer Laopu Gold. In its third quarterly rebalance of the year, six names were added to the International IPO ETF, including Chinese pharmaceutical Jiangsu Hengrui and Chinese condiment producer Foshan Haitian Flavouring & Food.
The IPO ETFs aim to offer a systematic investment approach, novel diversification, and dynamic access to the transformative period post-IPO. We believe that the defined three-year holding period makes these the go-to ETFs for investors interested in new stocks, as they include names not found in most core portfolios.
Investors interested in the ETF can access fact sheets, performance data, and holdings on our website, or contact our team for further information.
Investments in the Renaissance IPO ETF, symbol “IPO”, and the Renaissance International IPO ETF, symbol “IPOS” (the “ETFs”) are subject to investment risk, including possible loss of the principal amounts invested. The ETFs invest in companies that have recently completed initial public offerings. These stocks are unseasoned equities lacking trading history, a track record of reporting to investors and widely available research coverage which may result in extreme price volatility. Due to a greater number of IPOs in certain segments, the ETFs may also be subject to information technology and financial sector risk, small and mid-capitalization company risk, and, for the Renaissance International IPO ETF, emerging market risk. The ETFs may hold securities in the form of Depository Receipts, REITs, and Partnership Units, which have greater risks than common shares. The strategies have high portfolio turnover and securities lending risks. The returns of the ETFs may not match the return of the respective indices. The ETFs are classified as non-diversified investment companies subject to concentration risk.
For a prospectus and/or summary prospectus with this and other information, please visit the document center at etfs.renaissancecapital.com. Investors should read the prospectus and consider the investment objectives, risks, charges and expenses carefully before investing.
Companies mentioned in this article may be held by the funds. For a list of the Renaissance IPO ETF’s top 10 holdings, please click here. For a list of the Renaissance International IPO ETF’s top 10 holdings, please click here. Fund holdings are subject to change.
Foreside Fund Services, LLC, is the distributor for the ETFs. For additional information, contact Foreside at 1-866-486-6645.
Definitions
The Renaissance IPO Index (IPOUSA) is a portfolio of companies that have recently completed an initial public offering and are listed on a US exchange. The Renaissance International IPO Index (IPOXUS) is a portfolio of companies that have recently completed an initial public offering and are listed on a non-US exchange.
Excess Return is the difference between the return of a portfolio and the return of a specified benchmark over a given period. A positive excess return indicates outperformance over a specified benchmark. Tracking Difference is the difference between the return of a portfolio and the return of its underlying index over a given period. Standard Deviation of returns measures the average a return series deviates from its mean. It is often used as a measure of risk. When a fund has a high standard deviation, the predicted range of performance implies greater volatility.