Radhika Gupta explains IPO funds: What investors should know about this niche mutual fund category

IPOs often remain on retail investors' radars, but picking promising businesses is difficult. Radhika Gupta, MD & CEO of Edelweiss Mutual Fund, recently shared her views on the Edelweiss Recently Listed IPO Fund, offering insights into how investors can get exposure to newly listed companies through mutual funds.

So, let’s understand what IPO funds are, how they work, and their key benefits and risks.

What did Radhika Gupta mention?

On 22 June 2026, Radhika Gupta shared her views on X, "Diversification? This portfolio overlaps with a few other schemes because it focuses on recently listed IPOs. Its long-term track record speaks to the quality of IPO selection.

Can it be volatile (mid, small, micro)? Yes. Hence, most suited to do a SIP. Rather than figuring out which IPO to invest in every month, let a fund do it for you!

Fund: Edelweiss Recently Listed IPO.”

In her view, Edelweiss's IPO Fund strategy is built around recently listed IPOs, which can lead to overlap with other schemes. However, she says it reflects its focused investment approach and the quality of its IPO selection over time.

She also acknowledges that the portfolio can be volatile because it includes mid-, small-, and micro-cap exposure, which typically experience sharper price movements. Because of this, she suggests that the fund is better suited for a Systematic Investment Plan (SIP) approach.

Overall, her message highlights that, instead of trying to pick IPOs individually every month, investors can use this fund as a structured way to participate in the post-listing journey of new companies.

What are IPO funds?

IPO funds are equity mutual fund schemes that invest primarily in recently listed companies. Rather than applying for individual IPOs, investors gain exposure to a portfolio of newly listed businesses through a professionally managed fund.

The objective is to participate in the post-listing growth potential of companies that have recently entered the market, while reducing the need for investors to identify and track individual IPOs.

How do IPO funds work?

These funds invest in companies that have been listed on stock exchanges over the past few months or years. Fund managers evaluate factors such as business fundamentals, management quality, growth prospects, valuation, and industry trends before selecting stocks.

Unlike direct IPO investing, where returns depend on the performance of a few individual listings, IPO funds spread investments across multiple recently listed companies, thereby helping diversify portfolios.

Benefits of investing in IPO funds

• Access to emerging businesses: Investors can participate in the growth story of newly listed companies.
• Professional stock selection: Fund managers conduct research and identify companies they believe have long-term growth potential.
• Diversification across IPOs: Instead of relying on a single IPO, investors gain exposure to a basket of recently listed companies.
• Convenience: Investors can participate through SIPs or lump-sum investments without worrying about IPO applications, allotments, or listing-day volatility.

Risks investors should consider

• Higher volatility: Newly listed companies often experience sharp price swings as markets assess their valuations and growth prospects.
• Small-cap and mid-cap exposure: IPO-focused portfolios allocate heavily to small- and mid-cap companies, which can be more volatile than those of established large-cap funds.
• Limited public track record: Since these companies are relatively new to the stock market, fund managers have less historical data to evaluate their performance.
• Market sentiment risk: IPO-heavy portfolios can be particularly sensitive to changes in investor sentiment and liquidity conditions.

How does the Edelweiss Recently Listed IPO Fund work?

Edelweiss Recently Listed IPO Fund is an open-ended equity scheme that follows a unique investment theme, focusing on 100 recently listed companies and upcoming IPOs.

The fund manager follows a bottom-up stock selection approach and invests across sectors, with a higher focus on small-cap and mid-cap companies.

It was launched on 22 February 2018 and manages assets worth around ₹1,004 crore as of May 2026. It falls into the very high-risk category, mainly because of its focus on recently listed, smaller companies, which tend to be more volatile.

The fund's top holdings are ICICI Prudential Asset Management Company, followed by LG Electronics India and Atlanta Electricals. Other notable allocations include Aditya Infotech, Emmvee Photovoltaic Power, and Ather Energy.

Its benchmark is the NIFTY IPO Index, which tracks the performance of recently listed IPOs on the NSE Mainboard. The index includes companies with a free-float market capitalisation of at least ₹100 crore at the time of listing and considers the last 100 IPOs that meet eligibility criteria.

Performance of Edelweiss Recently Listed IPO Fund

If you had invested ₹10,000 in the Edelweiss Recently Listed IPO Fund, your money would have grown to about ₹11,366 in 1 year, compared to ₹10,615 in the NIFTY IPO Index and ₹9,616 in the NIFTY 50 TRI.

This shows that in the short term, the fund has outperformed both the IPO-focused benchmark and the broader market.

Over a longer period, the gap becomes more visible. In 3 years, ₹10,000 in the fund would have become ₹16,490, while the NIFTY IPO Index would have grown to ₹15,446 and the NIFTY 50 TRI to ₹13,140.

Over 5 years, the investment would have increased to ₹18,338, again ahead of the IPO index and broader market index. Overall, the data shows that the fund has performed well in capturing gains from recently listed companies.

Therefore, IPO funds provide a structured way to participate in the growth potential of newly listed companies without having to select individual IPOs. While they offer diversification within the IPO universe, they also come with higher volatility and greater exposure to small- and mid-cap stocks.

Disclaimer: This is purely for educational/ informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.