A Bullish 2025 for the IPO Market? ETFs to Consider
IPO activity is projected to increase in 2025, fueled by anticipated policy changes under Trump and a more favorable business climate. According to Reuters, investment bankers are preparing for a resurgence in dealmaking within global equity capital markets this year, supported by a robust lineup of anticipated IPOs.
With growing economic confidence, capital market activity is expected to accelerate, offering significant advantages to firms preparing to go public. According to Goldman Sachs CEO David Solomon, as quoted on CNBC, the multi-year IPO drought is finally nearing its end, with the capital markets starting to show renewed activity before President-elect’s inauguration.
Per EY, as quoted on CFO Dive, proceeds from U.S. IPOs are expected to rise in 2025, driven by monetary easing. EY also notes that IPO activity tends to increase in the years following a presidential election, regardless of which party holds the White House.
Investors predict a robust IPO market in 2025, fueled by the incoming Trump administration’s plans for lower corporate taxes and easing regulatory conditions. Deal-making activity is expected to gain momentum, driven by an overall surge in deal appetite, with David Solomon forecasting growth in both the IPO and M&A markets.
Additionally, the change in administration, with Trump’s selection of Paul Atkins to chair the SEC, known for his support of financial deregulation, coupled with unified control of the House and Senate, could foster a less restrictive regulatory environment. This could further accelerate an IPO market, which is already set for a highly active year in 2025.
According to Reuters, the Cboe Volatility Index, a key measure of investor anxiety, is currently at a relatively low level of around 16, signaling a near-term rebound in capital markets and the increased risk-taking attitude of investors.
However, there are some headwinds, as higher federal spending and the potential for rising inflation due to Trump’s proposed tariffs could push up Treasury yields and trigger market volatility, dampening the optimism surrounding the IPO market recovery.
Multiple factors driving a positive IPO market outlook for 2025, make increasing exposure to the following funds a smart move.
First Trust U.S. Equity Opportunities ETF seeks to track the performance of the IPOX-100 U.S. Index with a basket of 100 securities. The fund has an asset base of $795.4 million and charges an annual fee of 0.59%.