The IPOX® Week, January 3rd, 2022

January 3, 2022

• After big 2020, most IPOX® Indexes lag in 2021, outperform other innovation-focused strategies.
• Europe leads amongst broad-based IPOX® Indexes performance rankings in 2021.
• Amid declines in the IPOX® SPAC (SPAC), 613 SPACs raised ca. $161.5 billion in the U.S.
• Global IPO activity sets record with 968 deals raising $327.8 billion. Taiwan’s AES best IPO performer.

2021 Summary:  The broad-based benchmarks played catch-up to the big 2020 IPOX® Returns during 2021, underpinned by strong earnings within a low risk (VIX: -24.31%) & low interest rate environment amid big central bank and government stimulus and the global COVID-19 overhang. A sellers’ market for New Listings with plenty of liquidity driving excessive (pre-)IPO valuations and the massive sentiment shift against Chinese Tech IPOs added as additional factors suppressing stronger IPOX® Indexes returns last year. With fund returns running at +220 bps. p.a. above the ETF tracking the S&P 500 (SPY) since fund launch in 2006, e.g., the innovation focused IPOX® 100 U.S. (ETF: FPX) rose +3.70% in 2021, 2319 bps. less when compared to the S&P 500 (SPX), however, significantly outperforming other innovation focused funds. While declines across China (and Brazil) pressured the IPOX® International (ETF: FPXI) during 2021, the IPOX® 100 Europe (ETF: FPXE), which provides all-cap exposure to European-domiciled companies in unique growth industries as provided by Deal Flow, added +9.09% in 2021.  Since launch in 2018, the associated 5-star ETF (ETF: FPXE) has added ca. +3137 bps. cumulative outperformance over conventional European equity exposure. We also note gains for some of the less seasoned IPOX® Indexes Strategies, such as the newly launched IPOX® IPO M&A Index (GNDX) which focuses on capturing the performance of the burgeoning space of highly liquid firms involved in global IPO M&A.

IPOX® 100 Europe (IPOE) Investing with the “FPXE” ETF since 2018

IPOX® Portfolio Holdings in focus:  Companies involved in computer hardware manufacturing tracked in the IPOX® Sub-Sectors ranked as some of the best and most consistent individual equity performers in 2021, including IPOX® 100 Index (ETF: FPX) heavyweights IPO M&A Marvell Technologies (MRVL US: +84.62%), Dell (DELL US: +51.50%), SiTime (SITM US: +161.36%) and Allegro Microsystems (ALGM US: +35.71%). Traditional Spin-offs, including Carrier (CARR US: +45.31%), Otis (OTIS US: +30.41%), Alcon (ALC US: +32.16%) or Siemens Healthineers (SHL GY: +59.38%) also outperformed. Amid the big losses for China- (and Brazil) domiciled stocks, Saudi-linked exposure tracked in the IPOX® International (ETF: FPXI) rose strongly, including hospital operator Dr. Sulaiman Al-Habib (SULAIMAN AB: +50.63%).

* Basis for CME-traded e-mini IPOX® 100 U.S. Futures (IPOH2). *Also available in UCITS format in Europe in EUR (EFPX IM), USD (IPXE LN), and GBP (FPX LN). GNDX, SPAC and IPEV returns measured since live launch on 08/13/2021, 07/30/2020 and 11/17/2020.

IPOX® SPAC INDEX (SPAC) REVIEW:  The index recorded a decline of -16.34% in 2021. 613 SPACs raised ca. $161.5 billion, more than double in both issuance number and proceeds raised when compared to 2020. With SPACs gaining +1.91% on average on their first day, respectively, 7 billion-dollar SPACs launched. 268 SPACs announced a merger target, including Lionheart Acquisition II (LCAP US: -1.19%) (with Medicaid and Medicare claims recovery specialist MSP Recovery being the largest deal in history) and Digital World Acquisition (DWAC US: +414.30%) (with Trump Media & Technology Group recording the biggest surge from any merger agreement yet). 198 SPAC’s approved business combinations include high-profile mergers such as Altimeter Group (with South-Asia super app operator Grab [GRAB US: -44.56%]) and Churchill Capital IV (with EV maker Lucid Motors [LCID US: +280.12%]). 16 SPACs terminated merger agreements and 1 SPAC liquidated in 2021.

GLOBAL Deal-flow Review and Outlook:  At least 968 non-SPAC IPOs (ex. China A-share and local India) launched in 2021, raising ca. $327.8 billion, a record in both number and volume. The average (median) equally weighted IPO rose +20.15% (+7.37%) based on the difference between its first close and final offering price. The U.S. dominated deal flow with 358 offerings (36.98%) raising ca. $154.32 billion (47.08%). U.S. EV truck maker Rivian (RIVN US: +32.94%), Chinese short-video sharing platform Kuaishou (1024 HK: -37.35%) and Korean e-commerce firm Coupang (CPNG US: -16.06%) ranked as the top three largest IPOs. Chinese micro-caps E-Home Household Service (EJH US: -67.11%) and Zhangmen Education (ZME US: -58.91%) initially rose most (but significantly declining through year-end 2021), while Taiwanese battery maker Advanced Energy Solution (6781 TT: +1086.30%) ranked as the best performer amongst all global IPOs in 2021.

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