IPO activity is projected to increase in 2025, fueled by anticipated policy changes under Trump and a more favorable business climate. According to Reuters, investment bankers are preparing for a resurgence in dealmaking within global equity capital markets this year, supported by a robust lineup of anticipated IPOs.
With growing economic confidence, capital market activity is expected to accelerate, offering significant advantages to firms preparing to go public. According to Goldman Sachs CEO David Solomon, as quoted on CNBC, the multi-year IPO drought is finally nearing its end, with the capital markets starting to show renewed activity before President-elect’s inauguration.
Per EY, as quoted on CFO Dive, proceeds from U.S. IPOs are expected to rise in 2025, driven by monetary easing. EY also notes that IPO activity tends to increase in the years following a presidential election, regardless of which party holds the White House.
What’s Reviving Market Sentiment?
Investors predict a robust IPO market in 2025, fueled by the incoming Trump administration's plans for lower corporate taxes and easing regulatory conditions. Deal-making activity is expected to gain momentum, driven by an overall surge in deal appetite, with David Solomon forecasting growth in both the IPO and M&A markets.
Additionally, the change in administration, with Trump's selection of Paul Atkins to chair the SEC, known for his support of financial deregulation, coupled with unified control of the House and Senate, could foster a less restrictive regulatory environment. This could further accelerate an IPO market, which is already set for a highly active year in 2025.
According to Reuters, the Cboe Volatility Index, a key measure of investor anxiety, is currently at a relatively low level of around 16, signaling a near-term rebound in capital markets and the increased risk-taking attitude of investors.
However, there are some headwinds, as higher federal spending and the potential for rising inflation due to Trump's proposed tariffs could push up Treasury yields and trigger market volatility, dampening the optimism surrounding the IPO market recovery.
ETFs to Consider
Multiple factors driving a positive IPO market outlook for 2025, make increasing exposure to the following funds a smart move.
First Trust U.S. Equity Opportunities ETF (FPX)
First Trust U.S. Equity Opportunities ETF seeks to track the performance of the IPOX-100 U.S. Index with a basket of 100 securities. The fund has an asset base of $795.4 million and charges an annual fee of 0.59%.
First Trust U.S. Equity Opportunities ETF has gained 8.52% over the past three months and 25.02% over the past year.
Renaissance IPO ETF (IPO)
Renaissance IPO ETF seeks to track the performance of the Renaissance IPO Index, with a basket of 26 securities. The fund has gathered an asset base of $153.7 million and charges an annual fee of 0.60%.
Renaissance IPO ETF has gained 1.82% over the past three months and 15.80% over the past year.
First Trust International Equity Opportunities ETF (FPXI)
First Trust International Equity Opportunities ETF seeks to track the performance of the IPOX International Index with a basket of 50 securities. The fund has gathered an asset base of $133.9 million and charges an annual fee of 0.70%.
First Trust International Equity Opportunities ETF has lost 2.31% over the past three months but has gained 12.74% over the past year.
Renaissance International IPO ETF (IPOS)
Renaissance International IPO ETF seeks to track the performance of the Renaissance International IPO Index, with a basket of 35 securities. The fund has gathered an asset base of $4.4 million and charges an annual fee of 0.80%.
Renaissance International IPO ETF has lost 6.65% over the past three months and 10.46% over the past year.
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First Trust International Equity Opportunities ETF (FPXI): ETF Research Reports
Renaissance IPO ETF (IPO): ETF Research Reports
Renaissance International IPO ETF (IPOS): ETF Research Reports
First Trust US Equity Opportunities ETF (FPX): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
