Initial Public Offerings (IPOs) continue to generate massive investor interest in India, often being oversubscribed many times over within hours of opening. While this speaks to the booming confidence in India’s equity markets, it also means that getting allotment in a quality IPO has become increasingly difficult. Many retail investors apply, only to be disappointed when the allotment results are announced.

So, what can you do if you are not allotted shares in a popular IPO? One smart option is to consider investing in recently listed IPO funds.

Why IPOs Are Tough to Get Allotted Now

The competition for IPOs has surged in recent years, and for good reason. Companies coming out with IPOs are typically market leaders or rapidly growing businesses. Their debut offers a chance to invest in them at potentially lower valuations before they rise further post-listing.

However, this massive demand has made it tough for small investors to secure allotment:

• Heavy oversubscription: Most IPOs are now oversubscribed multiple times. The retail portion may see 10-20x subscription or more.

• Lottery system: When the retail quota is oversubscribed, allotment is done through a lottery system, meaning it’s pure luck even if you applied early.

• Limited retail allocation: Retail investors get only 35% of the IPO allocation, further reducing chances of getting a share.

If you’ve missed out on multiple IPOs due to non-allotment, you’re not alone. But that doesn’t mean you have to miss out on the growth potential of newly listed companies.

Introducing Recently Listed IPO Funds

Recently listed IPO funds are mutual fund schemes or ETFs (Exchange-Traded Funds) that invest specifically in companies that have been listed recently through the IPO route. These funds offer a great way to participate in the potential upside of newly listed companies without having to worry about allotment issues.

Benefits of Investing in Recently Listed IPO Funds:

1. No Allotment Hassle: Since these are mutual fund schemes, you don’t have to worry about applying during IPO or the allotment process. You simply invest in the fund like any other mutual fund.

2. Diversification: These funds invest in a basket of newly listed companies. Even if one or two don’t perform well, others might compensate, reducing the overall risk.

3. Professional Management: The fund manager picks companies with strong fundamentals and potential for long-term growth, helping reduce the risk of overhyped IPOs with poor performance.

4. Liquidity: Unlike direct IPO investments where you might have to wait for listing and favorable price movements, these funds offer daily liquidity.

5. Access to Missed Opportunities: Even if you didn’t get shares in the IPO of a popular company like Zomato, Nykaa, LIC, or Mamaearth, you can still benefit from their post-IPO performance through these funds.

IPO not allotted – time to start Recently listed IPO fund

Who Should Invest?

If you’re someone who consistently applies for IPOs but often ends up with no allotment, recently listed IPO funds offer a great alternative. It is especially suitable for:

• Young investors looking to ride the startup and tech boom in India.

• SIP investors who want to add a high-growth theme to their portfolio.

• Busy professionals who don’t have time to track individual IPOs.

Summary

The IPO market is exciting, but the allotment process can be disheartening. Instead of missing out repeatedly, you can start a SIP or lump sum investment in a recently listed IPO fund. This gives you broad-based exposure to the same companies you wanted to invest in, without the uncertainty.

Talk to your financial advisor or call Shivakumar A – 9480240513 to get started with a Recently Listed IPO Fund today. Don’t wait for the next allotment result — invest smartly and stay ahead!