by Ian Cooper

One of the best ways to invest in an IPO is by not investing in an IPO at all.

That’s because investing in IPOs is a coin flip. Some stocks explode higher, like Amazon. Others are IPO duds, as we initially saw with Ferrari.

Now, there’s a potential IPO for OpenAI, which could get explosive.

The company has been raising capital from the heavyweights and, in due time, it might look to test its luck on the public markets. In fact, it just confirmed a $110 billion valuation, fueling speculation of an IPO.

As noted by Beincrypto.com, “OpenAI has raised billions in private funding over the past few years. Its most significant backer remains Microsoft, which committed multi-year investments reportedly totaling around $13 billion through structured equity and cloud partnerships. The new funding includes $30 billion from SoftBank, $30 billion from NVIDIA, and $50 billion from Amazon. Additional financial investors are expected to join as the round progresses.”

While you can always take your chances with a bet on an IPO, there are easier ways.

One, invest in the First Trust US Equity Opportunities ETF (FPX)

With an expense ratio of 0.61%, the FPX tracks hot IPOs, giving investors access to new stocks during their initial, most crucial days on market. By buying it, not only can you avoid paying gobs of money for IPOs that may or may not work out, but you’re also being exposed to multiple hot IPOs at the same time at lesser cost.

In fact, even with some of the most obnoxious IPO failures, the ETF managed to run from a 2009 low of around $11 to a recent high of $171.  It’s a safer alternative than risking your hard-earned money to another potential coin flip.

With the FPX, it doesn’t matter if the stock is hot or a dud, the excitement surrounding IPOs continues to send the FPX to new highs.

Or, you can use the Renaissance IPO ETF (IPO)

With an expense ratio of 0.6%, the ETF provides “investors with the largest, most liquid US-listed newly public company stocks in one security, reducing the risk of single-stock ownership while avoiding overlap with major core indices for optimal diversification across markets and time,” as noted by Renaissance Capital.

Since November 2023, the ETF rallied from a low of about $30 to its current price of $43. From here, we’d eventually like to see the ETF rally back to $60 a share, which it last tested in 2022.