Looking beyond the US, the global initial public offering (IPO) market offers investors access to a rich variety of companies transitioning from private to public ownership. However, the complexities of international markets can create more challenges for individual investors navigating the IPO space. Those looking to capture new stocks outside of the US can turn to the Renaissance International IPO ETF (Ticker: IPOS)—a passive, index-based exchange-traded fund designed to provide exposure to newly-public companies listed on international exchanges. This article outlines the key characteristics of and index methodology behind the International IPO ETF.
Characteristics of the International IPO Market
The international market for new stocks, or stocks that have been trading for less than three years, allows investors to diversify their portfolios with different geographies, in addition to other factors like sector, size, growth profile, and age. These firms may offer growth potential due to their roles in rapidly developing economies, particularly in regions like Asia, Latin America, and Eastern Europe.
The chart below illustrates the level of global IPO activity in recent years, highlighting the breadth of opportunities in international markets available through vehicles like the International IPO ETF.
Source: Renaissance Capital. Includes non-US IPOs that raised $100mm+. Excludes China A-Shares.
Investing in individual international IPOs involves risks, including price volatility driven by market sentiment, currency fluctuations, and geopolitical factors. Investors need to consider other factors as well, like potentially higher costs and difficulties with transaction timing associated with foreign markets. The International IPO ETF aims to address these risks and challenges by holding a diversified portfolio of recent IPOs from various regions, seeking to balance potential returns with reduced exposure to single-company performance and single-country risk, and provide an easier way to invest in new international stocks.
Investment Strategy: Passive and Globally Diversified
The International IPO ETF uses a passive investment strategy, seeking to replicate the performance of the Renaissance International IPO Index (before fees and expenses) instead of using active stock selection. This approach aims to maintain low costs and transparency for investors.
The International IPO ETF’s portfolio includes companies that have gone public on major international exchanges within a rolling three-year window and meet specific criteria, outlined in the International IPO Index methodology. This focus targets companies in their most transformative phase, often in high-growth regions, before they become established public entities.
The portfolio is diversified across multiple countries and sectors, reflecting the diverse composition of the global IPO market. This approach aims to reduce risks associated with individual IPOs while providing exposure to global economic trends.
Index Methodology: Tracking the International IPO Market
The Renaissance International IPO Index (IPOXUS) is a rules-based benchmark designed to capture about 80% of the total market capitalization of the universe of companies that have gone public on international (ex-US) exchanges within the last three years. Key components of the Index’s methodology include:
- Eligibility Criteria: Companies must have completed their IPO within the past three years and be listed on a recognized international exchange. They must also meet certain size, liquidity, and free float requirements.
- Weighting Approach: Constituents are weighted based on free float-adjusted market cap, and individual constituents are capped at 10%. This approach prioritizes more liquid names and promotes diversification, balancing exposure to larger and smaller IPOs across regions.
- Rebalancing Schedule: The Index is rebalanced quarterly to incorporate new IPOs and remove companies that have become “seasoned equities” (those that have been trading longer than three years). This process keeps the ETF aligned with the evolving IPO market.
This methodology ensures investors gain broad, representative exposure to the international IPO market while maintaining the discipline of a passive strategy. Access the full methodology here.
Key Characteristics: Large/Mid-Cap Portfolio with a Tilt Towards Sectors Driving the Most Active International Markets
The International IPO ETF aims to capture the largest, most liquid new stocks outside of the US, so it is often tilted towards the most active sectors in the most active international markets.
As of 10/31/25, the International IPO ETF had significant representation in the consumer discretionary sector (21.7% by weight) and the industrial sector (19.0%). There was also solid investment in the tech sector (20.0%), though there has been less in recent years in line with a global shift away from growth names, particularly outside of the US. However, we expect this to shift again as growth names come back into focus with the growing AI wave.
The International IPO ETF’s geographic distribution highlights its focus on providing diversification while also offering access to emerging markets. Higher levels of exposure to stocks listed in Hong Kong (41.3% by weight) and Japan (21.8%), as well as Germany (11.1%) and Switzerland (9.7%), reflect investments in markets with high activity (i.e. Asia) and very large IPOs (i.e. Europe).
The International IPO ETF’s market cap distribution underscores its focus on providing exposure to large and liquid names. Mixed exposure to large-cap companies (>$10B; 69.5% by weight) and mid-cap companies ($2B-$10B; 30.5%) provides a balance between growth potential and stability.
How the International IPO ETF Stands Out
The International IPO ETF focuses specifically on new stocks in international markets, distinguishing it from most global benchmarks. Unlike actively managed international funds, which may incur higher fees and rely on discretionary stock selection, the ETF’s passive strategy aims for cost efficiency and consistency. Its three-year rolling window also sets it apart from other IPO-focused, emerging market, or global growth ETFs, which often include more established public issuers.
Relative to directly investing in international IPOs, the ETF eliminates the need for individual company research or access to foreign IPO allocations, offering a streamlined approach to the global IPO market. This structure may appeal to investors seeking systematic exposure without the complexity of selecting individual IPOs or navigating international markets.
Who Should Consider This ETF?
The International IPO ETF is designed for growth-oriented investors who believe in the long-term potential of innovative, newly-public companies, especially those in emerging markets. It may be a good fit for:
- Investors seeking exposure to disruptive companies in high-growth regions like Asia, and sectors like technology and financials.
- Those looking to diversify their portfolios with an asset class that complements traditional large-cap or value-focused funds.
- Financial advisors building portfolios for clients with a higher risk tolerance, long-term investment horizons, and an interest in ex-US markets.
The new stock asset class may represent a portion (i.e., 5-10%) of a diversified portfolio, complementing large-cap or value-focused investments, depending on an investor’s objectives and risk profile.
Risk Considerations
Investing in newly-public companies involves risks. IPOs can experience price volatility due to market sentiment, limited financial histories, and events such as lock-up period expirations, which may allow insiders to sell shares. External factors, including interest rate changes or regulatory developments, may also affect IPO performance.
The International IPO ETF seeks to mitigate these risks through diversification and a rules-based index methodology, limiting the impact of individual companies or sectors.
Conclusion
The Renaissance International IPO ETF provides a systematic, cost-efficient means of investing in the new stock asset class. By tracking a diversified, rules-based index, the IPO ETF offers exposure to the IPO market while addressing some of the risks associated with individual IPO investments. Its sector and market cap distributions align with the growth-oriented nature of recent IPOs, while its passive strategy ensures accessibility and transparency.
Investors interested in the ETF can access its fact sheet, performance data, and holdings on our website, or contact our team for further information.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus and/or summary prospectus with this and other information, please visit the document center at etfs.renaissancecapital.com. Read the prospectus carefully before investing. Foreside Fund Services, LLC, is the distributor for the ETFs. For additional information, contact Foreside at 1-866-486-6645.