Main St. investors traditionally expect to be shut out of sizzling IPOs and kept ignorant of which stocks are in their mutual fund at any given time. Online money manager
just launched a fund that's intended to fly in the face of both traditions.
The Metamarkets IPO & New Era fund,
previewed on July 14, has launched, according to a Monday announcement on the firm's Web site. The no-load fund will primarily invest in companies at or within 18 months of their initial public offering, according to its prospectus. Like the
Metamarkets Openfund, the IPO fund will post its holdings and completed trades on the firm's
Web site. In order to help the fund's management team stay nimble, the fund will close at $300 million, according to its prospectus.
The fledgling fund currently has $1.1 million invested in 14 securities, according to the Metamarkets Web site. Most of the fund's assets are currently invested in the
Nasdaq 100 Tracking Stock
, exchange-traded shares that track the performance of the tech-laced
Nasdaq 100 Index
. It's next-three largest holdings are technology stocks:
Brocade Communications Systems
Like its sibling Open fund this new offering will have few restrictions and plenty of volatility. The fund's managers can trade frequently, short stocks, and use leverage to boost returns. Over the past year the Open fund is up 77.8%, trouncing the
and nearly 75% of its mid-cap growth peers, according to
. But the road to those returns has been bumpy. In the second quarter of this year, for instance, the fund lost 20.4%.
This will be just the third fund out there with an IPO label. The others are the no-load
IPO Plus Aftermarket, up 2.5% this year, and the H&Q IPO & Emerging Company, down 10% this year, which is available through brokers or directly.
The Metamarkets fund's annual expenses are expected to be 2%. That's higher than the average stock fund, but comparisons are difficult given the fund's focus on IPOs.