Markets endured more volatility in the fourth quarter as investors grappled with an extended government shutdown in the US, rate cut expectations, and growing AI valuation fears. The flow of initial public offerings (IPOs) slowed in October due to the shutdown but picked back up mid-quarter thanks to updated guidance for new listings from the Securities and Exchange Commission, before tapering off again near year end. Performance was mixed as sentiment somewhat shifted away from growth stocks, causing some divergence in global benchmarks, as new stock-focused funds like the Renaissance IPO ETF and the Renaissance International IPO ETF traded lower while broader market funds delivered modest gains.
Performance Snapshot
Below we highlight fourth 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 12/31/25. Figures for the quarter ended 12/31/25. 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) (SPY) (ACWX).
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 Underperform as Demand for New Stocks Falters
The Renaissance IPO ETF returned -7.9% in Q4, well below the SPDR S&P 500 ETF Trust, which returned +2.7%. The IPO ETF was weighed down by the sentiment shift away from growth stocks, as well as particularly poor performance from newer AI-focused names that aren’t currently included in the S&P 500. This resulted in a -10.6 percentage point excess return in the IPO ETF.
The Renaissance International IPO ETF returned -3.5% in Q4, underperforming the iShares MSCI ACWI ex US ETF, which returned +4.9%. The International IPO ETF was weighed down by broader headwinds in markets like Europe, as well as some specific challenges primarily affecting new stocks in certain markets, like pressure in the Chinese EV space. This resulted in a -8.4 percentage point excess return in the International IPO ETF.
The IPO ETFs’ performance came with higher volatility, evidenced by higher standard deviation of daily returns during the quarter compared to the broader market benchmarks (1.9% for IPO vs. 0.8% for SPY; 1.3% for IPOS vs. 0.7% 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 Q4, the IPO ETF returned -7.9%, compared to a -7.9% return for the IPO Index. The modest tracking difference of +0.03% is consistent with expectations for a passive strategy and reflects the impact of management fees, corporate actions and rebalance timing, and cash drag.
The Renaissance International IPO ETF seeks to replicate the performance of the Renaissance International IPO Index, which captures newly public internationally-listed companies. In Q4, the International IPO ETF returned -3.5%, compared to a -3.8% return for the International IPO Index. The moderate tracking difference of +0.21% reflects the expectations for a passive strategy listed above, particularly cash drag, which had a positive rather than negative effect as it provided a buffer, 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 included cruise operator Viking, which traded up on a very strong Q3 earnings report, and embattled consumer health company Kenvue, which jumped on news that it would be acquired by manufacturing giant Kimberly-Clark. In a turn from the previous quarter, the biggest detractors were companies with strong AI and other disruptive tech angles, namely infrastructure provider CoreWeave, chipmakers Arm and Astera Labs, and stablecoin issuer Circle. In its fourth quarterly rebalance of the year, ten names were added to the IPO ETF, including tech-enabled lenders Klarna and Figure, and aerospace firms BETA Technologies and Karman.
Top contributors in the Renaissance International IPO ETF included Japanese chip plays Kioxia and Kokusai Electric and Swiss pharma Galderma, which has continued to climb on strong demand for its recently-approved atopic dermatitis drug. The biggest detractors were German defense contractor Renk, weighed down by disappointing forecasts and broader headwinds in Europe, and Chinese electric vehicle maker Leapmotor, due in part to greater pressure in the country’s EV market. In its fourth quarterly rebalance of the year, seven names were added to the International IPO ETF, including China-based gold miner Zijin Gold International and Chinese auto maker Seres Group.
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.