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ETFs to Add After SurveyMonkey Blockbuster IPO

Smart Beta ETF report for FGD

A leading global survey software company — SurveyMonkey — made its debut on Nasdaq under the ticker symbol "SVMK" on Sep 26. The IPO was strongly greeted by investors as its shares soared as much as 67% during the first day of trading and were up 43% at the close.

SurveyMonkey has raised nearly $180 million through the IPO offering of 13.5 million shares at $12, above the previous expected price range of $9-$11 per share (read: Why Software ETFs are Soaring).

SurveyMonkey: A Good Bet?

SurveyMonkey builds software products that companies can use to get input from employees, customers and others. Per the IPO filing, the company has attracted an aggregate of more than 60 million registered users to its survey platform since its foundation in 1999. Of the registered users, around 16 million were active in the past year.

The leading software company has good history of revenue growth, from $207.3 million in 2016 to $218.8 million in 2017. In fact, revenues rose 13.8% to $121.2 million in the first half of 2018. Though revenues are on the rise, SurveyMonkey is operating at a loss. Net loss widened to $27.2 million from $19.1 million in the first half of 2018 and is likely to be about $54 million for the full year. However, the company narrowed its losses from $76.4 million in 2016 to $24 million in 2017.

Elevated operating costs are hurting the company’s profitability. SurveyMonkey is expected to spend roughly $196 million in 2018 compared to $176.9 million last year.

The IPOs in the technology sector have been booming this year with 24 companies going public, per PwC. This is higher than the year-ago number of 11. The upward trend is likely to continue for the rest of the year and the next (read: Another Tech IPO Soars: ETFs in Focus).

ETFs in Focus

The successful market debut of SurveyMonkey could pave its entry into a number of ETFs in the coming days. Investors seeking to take advantage of growing investor appetite for software services platforms and newly public technology companies could benefit from these ETFs in the months ahead.  

First Trust US Equity Opportunities ETF FPX

This ETF targets the U.S. IPO market and follows the IPOX-100 U.S. Index. It focuses on the 100 largest and most liquid U.S. IPOs. New companies can find entry into the fund’s holding after trading for a minimum of 100 days. In total, the fund holds 100 securities in its basket with the largest allocation going to PayPal Holdings at 8.2%. The product has accumulated $1.2 billion in its asset base and charges 59 bps in fees a year. Volume is moderate as it exchanges about 60,000 shares in hand on average (read: IPO ETF Hits New 52-Week High).

Renaissance IPO ETF IPO

This new fund also provides exposure to the largest and most liquid newly listed companies by tracking the Renaissance IPO Index. New companies seek inclusion on a ‘fast entry basis’ on the fifth day of trading. The fund holds 79 stocks in its basket with Spotify Technology SPOT and Athene Holding ATH taking the top two spots at 6.4% and 5.1%, respectively. From a sector look, technology stocks make up for 45.7% share while industrials and real estate round off the top three with double-digit exposure each. The product has attracted $19.7 million in AUM and trades in a light volume of around 4,000 shares, probably ensuring additional cost beyond the expense ratio of 0.60%.

iShares North American Tech-Software ETF IGV

This ETF provides exposure to the software segment of the broader U.S. technology space by tracking the S&P North American Technology-Software Index. Any addition or deletion of the stock is done semi-annually after market close on the third Friday of June and December, respectively. The fund holds a basket of 64 securities with largest allocation to Oracle ORCL and Microsoft MSFT. It has amassed $2.1 billion in its asset base and charges 47 bps in annual fees. Volume is good as it exchanges nearly 314,000 shares a day. The product has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Top-Ranked ETFs That Have Crushed the Market).

Invesco Dynamic Software ETF PSJ

With AUM of $303.9 million, this ETF also targets the software segment of the broader U.S. technology space and holds a small basket of 30 stocks with each accounting for no more than 5.18% share. The fund is rebalanced quarterly in February, May, August and November. It charges 63 bps in annual fees and trades in average daily volume of 27,000 shares. The product has a Zacks ETF Rank #2 with a High risk outlook.


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Microsoft Corporation (MSFT) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
ISHARS-NA TEC-S (IGV): ETF Research Reports
RENAIS-IPO ETF (IPO): ETF Research Reports
FT-IPOX 100 (FPX): ETF Research Reports
Athene Holding Ltd. (ATH) : Free Stock Analysis Report
Spotify Technology SA (SPOT) : Free Stock Analysis Report
PWRSH-DYN SFTWR (PSJ): ETF Research Reports
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