U.S. IPO Market Rebounding Fast: ETFs Likely to Gain

Core Insights - The IPO market in the U.S. is showing signs of recovery, with 150 IPOs raising $29.6 billion in 2024, marking a more than 50% increase in proceeds compared to 2023, although still below historical averages [1] - The year 2025 is expected to see a rebound in IPO activity, particularly in the fall, following a slow start due to tariff concerns [2] - Renaissance Capital forecasts that 40 to 60 IPOs could raise approximately $10 billion by year-end 2025, bringing the total for the year to 190 IPOs and around $35 billion raised [5] IPO Activity Trends - Year-to-date, IPOs have raised $23 billion, consistent with the same period last year, and a significant increase in deal activity is anticipated as the market approaches fall [3] - Goldman Sachs expects its busiest week for IPOs since July 2021, indicating a resurgence in market activity [4] Market Drivers - Factors contributing to the IPO market revival include a strong equity market and potential Federal Reserve rate cuts, which could enhance company valuations and investor sentiment [6][7] - Economic growth and the AI boom are also favorable for IPOs, particularly for companies in tech, crypto, and AI sectors, which are likely to attract significant investor interest [8] ETFs Focus - The Renaissance IPO ETF offers exposure to 80% of the market capitalization of newly listed companies, with top holdings including Reddit, Astera Labs, and Arm Holdings, and has gained 18% this year [9] - The First Trust US Equity Opportunities ETF tracks the performance of the top 100 companies by market capitalization in the IPOX Composite U.S. Index, with top holdings including GE Vernova, Palantir, and Applovin, and has advanced about 30% this year [10][11]