Nine years ago, Renaissance Capital
launched its first mutual fund, the IPO Plus Aftermarket Fund
, and it is still the only fund of its kind. Now, in an interview with the MutualFundWire
, portfolio manager and chief investment officer Linda R. Killian
reflects on where the fund has come.
Killian, a principal and founder of Renaissance, explains that, when it started in 1991, the company was initially all about doing institutional research on IPOs. Demand, however, drove Renaissance into the fund sector.
"There was a tremendous amount of individual investor interest in IPOs," Killian explained to the MFWire
, but there wasn't much opportunity to buy.
On December 19, 1997, Renaissance launched the IPO Plus Fund, to this day still the firm's only fund. It was initially a huge success, rising to $200 million in assets under management in its first year. However, the bursting of the dot com bubble has since taken its toll, and the fund currently floats around a more modest $20 million AUM.
The basic idea of the fund is to buy into IPOs and aftermarket sales (they comprise at least 80 percent of its holdings at any given time), things individual investors have trouble getting into.
"We buy on the offering," Killian said, "as well as in the aftermarket."
The fund holds between 30 and 50 stocks at any given time, and holds most of them until they reach a target price, leading to what Killian admits is a high turnover rate (it has held steady at nearly 160 percent in the past two years). The fund also hangs on to some of its stocks for a solid, "core" holdings group.
According to Killian, the IPO Plus Fund is still the only fund of its kind. She says the major fund players shy away from imitating it as they already face severe internal competition for IPO shares. And Killian also admits that the IPO Plus Fund is not a regular investment.
"An investor should really look at an IPO fund as an alternative investment," Killian opined.
Killian sees a bright future ahead for the fund, though she's not sure Renaissance is ready to launch another fund.
"We know there's demand, and we see some very interesting companies teed up to go public this fall," Killian said. "If we did offer another fund, and we have thought about it, it would be something related to IPOs."
Prior to founding Renaissance, Killian worked as a portfolio manager and analyst at Citicorp Investment Management and then Werheim Schroder Investment Services.
According to its prospectus
, the fund has net annual operating expenses of 250 basis points. Investors must put in an initial minimum of $5,000 (only $2,500 through an IRA, or $1,000 with the automatic investment plan).
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