A (I)POX on Your Portfolio

One byproduct of the exchange-traded fund boom is gimmicky ETFs. However, some funds that might at first glance appear gimmicky can be quite useful, like the First Trust IPOX-100 Index Fund (FPX Quote), which started trading Thursday.

IPOX Schuster, which will manage the ETF, maintains several indices of IPOs trading in the after market. The stocks in the IPOX-100 Index, and by extension the ETF, are the 100 largest issues that are in their seventh through 1,000th trading days after coming public. This pulls in a broad swath of stocks that currently include such biggies as the Chicago Mercantile Exchange (CME Quote) and Google (GOOG Quote).

Over the last 10 years, the average annual return for IPOs has been 11.78%, vs. 8.84% for the S&P 500. ...