High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders, 3rd Edition

Chapter 19

IPO Funds

With more than 10,000 mutual funds on the market, it seems only natural that some would invest heavily in initial public offerings (IPOs)—and there are several that do. After all, as stated in the Introduction, mutual funds buy a large percentage of all IPO shares. It is actually a good way to juice a mutual fund’s performance. In fact, legendary portfolio managers—like Fidelity Magellan’s Peter Lynch—have gotten allocations of IPOs. The larger the fund, the bigger the chance the portfolio manager will get shares, especially for hot deals.

However, there are some mutual funds that will buy shares even before a company goes public. That is, they will participate in venture capital rounds of financings. Some of the well-known ...