A convenient gateway to new companies

Edelweiss Recently Listed IPO Fund invests in IPOs and newly listed companies. Here are its pros and cons.

Over the last two years, the Indian equity markets have witnessed one of the strongest rallies following the crash in early 2020. With the sun shining, companies left no stone unturned to make hay, thereby leading to a frenzy of IPOs in 2021 – the highest in more than a decade.

Investing in IPOs has its own charm for retail investor. If one gets an allotment in the right IPO, one can even double the invested corpus in a single day. However, the reality is quite different. One, getting an allotment is a function of sheer luck. Second, getting the allotment in the desired quantity is nearly impossible. Third, not all good IPOs do well on listing but gather momentum post listing over the next few months. A retail investor often has limited skills to determine how long he should hold onto it.

How about investing in a fund that in turn invests in newly listed companies? Such a fund can solve all the above problems for retail investors. Edelweiss Recently Listed IPO Fund is one such scheme.

The promise

Initially named 'Edelweiss Maiden Opportunities Fund - Series 1', this fund was launched in February 2018 as a closed-end scheme with a maturity period of three years. Aimed at capturing opportunities in recently listed and upcoming IPOs, the fund was benchmarked against the Nifty 500 TRI. Probably to capitalise on the spate of IPOs, in June 2021, it was renamed, converted into an open-end fund and benchmarked against the India Recent 100 IPO TRI.