In June, Space Exploration Technologies Corp. (SpaceX) successfully completed the largest initial public offering (IPO) in history, introducing roughly $75 billion worth of shares at an overall valuation near $1.77 trillion. 1 With other high-profile companies reportedly preparing to follow suit in the months ahead, an important question looms for investors: how should newly listed public equities be incorporated into investment portfolios? Amid the media hype that surrounds mega-IPOs, the empirical evidence on new listings reveals a distinct, and often counterintuitive pattern of risk and return. Below, we discuss these dynamics, highlighting how the First Trust US Equity Opportunities ETF (FPX) has sought to capitalize on them over the past couple of decades, as well as the First Trust International Equity Opportunities ETF (FPXI), which applies a similar approach to new listings domiciled outside the United States.

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