As IPOs reach higher, discipline
keeps portfolios grounded

Key takeaways:

• While some IPOs have delivered strong results, outcomes are highly dispersed—and fundamentals don’t always materialize in line with initial optimism.
• IPOs don’t need to be avoided, but they should be approached with realistic expectations around return potential and sensitivity to market conditions.

06/17/2026 – After several years of muted new stock issuance, the IPO pipeline is regaining momentum. Roughly $28 billion has been raised across nearly 40 deals year-to-date, putting 2026 on pace to be one of the stronger IPO markets in recent memory, according to Goldman Sachs.

Yet context matters. Even with the recent pickup, IPO issuance remains well below the euphoric peaks of 1999 and 2021. History also reminds us that not every new listing becomes the next trillion-dollar franchise, despite the powerful narratives that often accompany these debuts. Framing IPOs as once-in-a-lifetime opportunities can blur the distinction between a few extraordinary successes and a much broader, more uneven reality—where outcomes are widely dispersed and fundamentals don’t always materialize in line with the optimism embedded in early valuations.

The accompanying chart highlights that even the most prominent IPOs tend to exhibit significant early-stage volatility. The median IPO, for example, gains about 29% on its first trading day—often fueled by strong investor enthusiasm around high-profile debuts. But that momentum doesn’t always last: one year later, the median IPO sits roughly 26% below its offer price, and drawdowns—approaching a median of 58%—have historically been the rule rather than the exception.

IPO volatility, as measured by the standard deviation of returns, has been materially higher than that of the broader equity market. Since its 2013 inception, for example, the Renaissance IPO ETF has delivered roughly half the return of the S&P 500® Index through June 12, 2026—while experiencing approximately double the volatility. This gap reinforces that early enthusiasm has not consistently translated into sustained outperformance.

The reawakening of the IPO market presents a test of discipline. Investors don’t need to avoid IPOs outright, but they should approach them with realistic expectations around return potential, limited operating histories, and sensitivity to market conditions. Allocations should be grounded in a clear understanding of valuation and structural dynamics—and considered within the context of a broader portfolio strategy. Rather than a shortcut to quick gains, IPOs are best viewed as one component of a measured, long-term investment process.