investment opportunity in purchasing shares of recently public companies: worth considering?
The Edelweiss Recently Listed IPO Fund, a unique investment offering, aims for capital appreciation by primarily investing in equity and equity-related securities of recently listed companies or upcoming IPOs. This fund's strategy is designed to capture growth opportunities in new and recently listed firms, which typically exhibit higher volatility and risk.
Over the past few years, the fund has demonstrated a robust performance. In the last 1 year, it has returned approximately 1.14%, while its 3-year annualized return stands at around 17.91%. For comparison, more diversified categories and benchmarks like the Nifty 50 or balanced hybrid funds usually show different return profiles. For instance, the Edelweiss Balanced Advantage Fund had trailing returns of -0.78% over 1 year and 11.86% over 3 years.
The Edelweiss IPO Fund's performance is noteworthy given its heavy small-cap bias, with over 60% of its recent portfolio invested in small caps. The fund charges a 2.0% exit load if units are sold within 180 days of purchase and is subject to applicable capital gains taxation based on holding period.
The fund's investment style is biased towards growth, given that many IPOs tend to be priced to perfection or overvalued. However, the fund's performance has been reasonably good compared to many diversified category funds, despite some funds in the value, momentum, mid, and small cap stables giving higher returns over the past five years.
The fund's long-term performance is particularly impressive. Over the medium to long terms (3-8 percentage points), the fund has beaten its benchmark, as per NSE data as of July 31. The fund's seven-year SIP returns (XIRR) are 18.8%, while a monthly SIP in the Nifty 500 TRI would have yielded 17.5%.
The fund has shown consistent performance over the years, with more than 12% returns over 89% of the times and in excess of 15% for as much as 79% of the times on a 3-year rolling basis from February 2018-July 2025. On 3-year rolling returns over the above-mentioned period, the fund has given mean returns of 20.9%.
The fund's success can be attributed to its strategic holdings. It has benefited from stocks such as Bharti Hexacom, Hyundai Motor India, Vishal Mega Mart, Sagility India, and Awfis Space Solutions in the last one year. The fund also holds notable stocks like Kaynes Technology, Bikaji Foods, and Doms Industries, which listed 1.5-3 years ago and have delivered well in this timeframe.
Investors opting for this fund should be comfortable with higher volatility and concentrated portfolio risk due to its niche investment theme. The fund invests in recently listed 100 companies or upcoming IPOs and holds onto IPOs for reasonably long periods, sometimes for over a year, except in rare instances.
While data on the fund's benchmark, the Nifty IPO index, is not extensively available, the fund has performed well compared to the Nifty 500 TRI, particularly over the three and five-year time periods. For the five-year timeframe, the return figure is 22.3%.
In conclusion, the Edelweiss Recently Listed IPO Fund offers a focused exposure to recently listed equity securities, with moderately strong medium-term returns (3 years ~17.9%) compared to more diversified or balanced funds that have lower returns and risk. However, as with any investment, it carries a higher risk due to its concentrated portfolio and focus on recently listed companies. Potential investors should carefully consider their risk tolerance and investment objectives before investing.
- The Edelweiss Recently Listed IPO Fund invests primarily in equity and equity-related securities of recently listed companies or upcoming IPOs, aiming for capital appreciation by capturing growth opportunities in new and recently listed firms.
- Despite its heavy small-cap bias and over 60% of its portfolio invested in small caps, the fund's performance has been reasonably good compared to many diversified category funds.
- The fund has shown consistent performance over the years, with more than 12% returns over 89% of the times and in excess of 15% for as much as 79% of the times on a 3-year rolling basis.
- The fund has performed well compared to the Nifty 500 TRI, particularly over the three and five-year time periods, with a return figure of 22.3% for the five-year timeframe.
- Investors should be comfortable with higher volatility and concentrated portfolio risk due to the fund's niche investment theme, as it invests in recently listed 100 companies or upcoming IPOs and holds onto IPOs for reasonably long periods.
