Strategy Update: July 2026
IPO mania: Why the biggest hype rarely brings the best returns
REVIEW
THE FINANCIAL MARKETS IN JUNE
June played out differently than expected. It wasn’t the escalation of the war that weighed on equity markets, but rather its de-escalation, which sent oil prices tumbling – along with the previously leading technology stocks.
The trigger was the Iran war. Since the American and Israeli strikes at the end of February, the Strait of Hormuz, a transit route for a fifth of the world’s oil, had been largely blocked. In June, the conflict initially eased through a ceasefire agreement, then escalated again, before finally settling into a truce with direct talks in Qatar. Despite this bumpy course, oil prices fell sharply as markets priced in the reopening of Hormuz: WTI lost around 20% over the month, Brent a good 21%, trading below USD 74, its lowest level since the start of the war. Over the full year, energy nonetheless remains clearly positive (WTI +21.6%, US gasoline +75%). The price shock has only retreated from its peak, and it has already fed through into inflation in the real economy.
This connected with the second, market-defining thread: interest rates. Under new chair Kevin Warsh, who succeeded Jerome Powell, the Fed held its target range at 3.50% to 3.75% for the fourth consecutive time. But the projections did an about-face: nearly the entire committee now expects rates to stay flat or rise, with the median signaling a possible hike still in 2026 for the first time in years. The backdrop is war-driven inflation; US consumer prices rose to 4.2% in May, the highest level in three years.
Higher real rates hit the most highly valued assets first: the concentration in a handful of AI and semiconductor stocks reversed abruptly. Memory chip makers were at the center of it, with Micron, Samsung, SK Hynix, and SoftBank losing between 8 and 12% in single days. The trigger wasn’t weak earnings, but valuation concerns, rising rates, and the costs of AI infrastructure. The Nasdaq lost around 6%, the S&P 500 just under 3%. Investors rotated into defensive stocks: the Dow hit new highs, the EuroStoxx 50 gained nearly 3%, and the SMI around 4.5%. From a Swiss perspective, June wasn’t a bad month.
The rate shift was most visible in precious metals. Gold fell below USD 4,000 for the first time since November 2025, and is now around 29% below its January high; it lost a good 11% in June, silver more than 23%. Drivers were a stronger dollar, a more restrictive Fed, and a fading war premium. Central bank demand remains intact, but the tactical winds have clearly turned.
Monetary policy is diverging: while the Fed signals a hike, the SNB is holding its policy rate at 0%. Accordingly, the franc weakened, with the dollar gaining around 3.5% against the CHF and the euro 1.3%. Over the year, the picture is mixed: USD/CHF is about 2% firmer, EUR/CHF around 1% weaker.
Despite all the nervousness, risk appetite in the primary market remained high. On June 12, SpaceX pulled off the largest IPO in history at around USD 75 billion, at a valuation close to USD 1.8 trillion. On its first trading day, its market value briefly crossed two trillion before pulling back. More on this in our focus topic.
Bottom line: June’s fragility didn’t discharge through geopolitics, but through dependence on a handful of large technology stocks and the path of interest rates.
OUTLOOK
DIVERGENCE, WHEREVER YOU LOOK
If you’re looking for a single term that captures the financial markets in 2026, it’s “divergence.” On one hand, equity markets are proving remarkably robust — largely decoupled from geopolitical tensions and economic uncertainty. On the other hand, the differences beneath the surface are widening dramatically: the spread between winners and losers is as wide as it’s been in years.
A look at the numbers makes this tangible. The MSCI All Country World Index is up just over 10 percent year-to-date. But more than half of that performance — around 5.5 percentage points — comes from just ten companies, out of 2,397 index members in total. These are concentrated almost exclusively in the semiconductor and AI sector. At the same time, nearly half of all companies in the index show negative performance since the start of the year. Their weight in the index is around 31 percent, but the message is clear: the seemingly broad market rally is in reality being carried by a handful of heavyweights. This significantly increases dependency — and with it, concentration risk.
This divergence is not without consequences for market structure. It’s particularly visible in the options market. Strategies based on passive indices that generate additional income through selling options are growing strongly. In the S&P 500 alone, the volume of such approaches is estimated at around USD 100 to 150 billion. The mechanism behind this is crucial: when a small group of stocks accounts for an ever-larger share of index performance, demand for hedging and income strategies also concentrates on exactly those names. This pushes up the implied volatility of these heavyweights and creates a fragile equilibrium. If volatility rises in the dominant index components, that risk increasingly spills over to the broader market.
Further divergence is also increasingly visible in commodity markets, especially oil. While the Trump administration signals a geopolitical breakthrough, the situation in the Middle East remains tense and key supply chains remain disrupted. Yet markets are already pricing in a normalization — oil prices have fallen back to pre-crisis levels. In our view, investors are underestimating the structural consequences: strategic reserves need to be rebuilt, insurance premiums are rising, and infrastructure will take time to be fully reintegrated. Beyond that, we expect a lasting risk premium to persist across global oil markets.
Howard Marks long argued that one crucial element was still missing for a genuine bubble to form: heavily indebted balance sheets at the hyperscalers. That very element is now starting to emerge. The large tech companies are now plowing a large share of their operating cash flows into capex, particularly AI infrastructure, while debt levels rise through bond issuance. This is shifting the foundation of the boom — from balance sheets that were until now solid and lightly leveraged, toward expansion increasingly financed by debt. A pattern that, in previous cycles, has often marked the transition into a late stage.
FOCUS
IPO MANIA: WHY THE BIGGEST HYPE RARELY BRINGS THE BEST RETURNS
Headlines around SpaceX, OpenAI, and others currently make IPOs look like a sure-fire money machine. Billion-dollar valuations, enormous demand, and constant media presence all reinforce that impression. But a look behind the scenes shows: for investors, the real game often only begins after the listing.
IPO MANIA
2026 is increasingly shaping up to be the year of blockbuster IPOs. The kickoff came this month with Elon Musk’s SpaceX. And that’s likely just the beginning: Anthropic, the company behind Claude, and OpenAI, the creator of ChatGPT, are already next in line. Together, these three companies could be worth up to USD 4 trillion. For comparison: the 20 largest Swiss companies in the SMI combine for only around CHF 1.46 trillion. The scale is simply absurd. And precisely because of that, everything that can be written, analyzed, and commented on about SpaceX already has been. So we’re not interested in the hype itself, but in the real question: what happens after the IPO — and what drives performance once a company goes public?
IPO
Going public is undoubtedly a major step for a company: it brings fresh equity capital, increases visibility, and, at best, opens access to a broader pool of investors. At the same time, an IPO is also expensive, demanding, and comes with a clear price tag: more transparency, more regulatory obligations, and significantly more public pressure. Whoever goes public isn’t just selling shares — they’re also selling away a degree of flexibility. That’s exactly why the step is so demanding for many companies.
The alternatives to a classic IPO are varied. Depending on the starting position, a direct listing, new private equity or venture capital rounds, a SPAC deal, or a sale to a strategic buyer can all come into question. These paths can be faster, less dilutive, or administratively simpler — but they typically lack the large capital inflow that a classic IPO enables.
Investment banks play a central role here. They structure the process, craft the equity story, support the valuation, find the right investors, and ensure that supply, demand, and price discovery come together as cleanly as possible. In short: without investment banks, an IPO rarely runs smoothly — with them, it actually becomes marketable.
INDEX INCLUSION
The market share of passive index funds (ETFs) now exceeds 50 percent in many major indices. That makes index inclusion almost as important for new listings as the IPO itself: only once a stock is added to an index do ETFs and other passive mandates actually have to buy it. How quickly that happens depends heavily on the specific index.
In Switzerland, a company can appear relatively quickly in the broad SPI after its IPO — provided it has a free float of at least 20 percent. Free float refers to the portion of a stock that is freely tradable on the exchange. It excludes shares held by founders, management, strategic major shareholders, or the state — these are locked in and typically don’t come to market. The SMI requires more: the 20 constituents must not only be large but also among the most liquid in Switzerland, measured by trading volume — with a weighting cap of 18 percent per stock.
In Europe, the logic is similar: the STOXX Europe 600 is realistically attainable for newcomers, while the EuroStoxx 50 remains an exclusive circle that can only be entered with the right combination of size, liquidity, and country allocation.
The S&P 500 carries the greatest leverage. Since the US makes up more than 70% of the MSCI World and most passive products are benchmarked to the S&P 500, inclusion there typically triggers the strongest mechanical buying pressure among the major benchmarks. Index providers don’t look at total market capitalization, but at free-float market capitalization — that is, only the shares that are actually freely tradable. A company listed at a 2 trillion dollar valuation but with only 5 percent free float initially counts for only 100 billion in the index. For the S&P 500, there’s no fixed waiting period or a pure fast-entry rule like the one used by the Nasdaq-100. Inclusion follows the qualitative and quantitative criteria of the index committee, typically only once a company is sufficiently established, listed in the US, profitable, and has a high, investable free-float market cap. In practice, this is more a matter of months to years after the IPO than a handful of trading days.
As a result, index inclusion right after an IPO is generally not an immediate price driver, given the typically still-limited investable size. The effect tends to unfold with a delay: as free float grows, liquidity increases, and market maturity builds, inclusion in one of the major indices can act like a second IPO. At that moment, additional, structurally driven capital flows into the stock — creating a new demand base that can support the price on a lasting basis.
The decisive question is therefore: should you buy a company right at the IPO or immediately after — or is it worth waiting for this second effect? A look at the data gives a surprisingly clear answer.
SUCCESSFUL ON THE MARKET?
The strong demand for SpaceX shares quickly creates the impression that IPOs are an almost automatic way to make money. But a look at the data from the past ten years paints a much more sobering picture.
We analyzed every global IPO since 2016 with an issue volume above USD 1 billion — around 293 transactions in total. These include well-known names such as Stadler Rail, Baidu, Airbnb, EQT, Adyen, and Galenica. The geographic distribution stands out: most of these IPOs come from China, followed by the US, India, Germany, the UK, and South Korea. Switzerland accounted for just six transactions. By sector, financial companies dominate with over 20 percent, followed by consumer goods, industrials, and IT.
Post-IPO performance turns out to be sobering. In the first year, the median return is -15.3 percent. The range is enormous: the weakest 10 percent lose more than -64 percent, while the best gain over +41 percent. This wide dispersion shows how heavily single-stock risk weighs on IPOs.
The following two years remain challenging as well. On a median basis, companies lose a further -16.3 percent. Again, the range is wide: the worst 10 percent lose an additional more than -68 percent, while the best gain more than +45 percent. Overall, this paints a clearly negative picture for the first three years after an IPO.
Regional differences exist, but the underlying pattern doesn’t fundamentally change. In China, newly listed companies lose around -25 percent in median terms in the first year, -23 percent in the US, and -5 percent in India. The handful of Swiss IPOs perform better, with a median of +5 percent in the first year, but they cannot durably break the global trend — over three years, performance deteriorates here too.
A look at sectors further challenges common narratives. Energy companies are the only ones that managed to create median value over the first three years — though this result is based on a very small sample size and is correspondingly not very robust. The much-celebrated IT sector, by contrast, fails to convince: here, IPOs lose around -31 percent in median terms over three years. Even defensive areas like consumer staples perform surprisingly poorly, with a median decline of around -75 percent — not least driven by overvalued hype themes such as oat milk or vegan burgers in individual issues.
IPOs – HANDS OFF
The data paints a clear picture: money can be made with IPOs — but mainly if you manage to identify the few long-term winners early on. Broadly speaking, however, investing at the IPO is frequently associated with disappointing performance.
Anyone wanting to capture the structural tailwind of passive capital flows is therefore often better off being patient. It’s not the first trading day that matters, but the moment a company becomes large and liquid enough to be included in the relevant indices. Only then does that mechanical demand effect emerge, which can sustainably support prices. To be successful, though, even this moment must be anticipated rather than already known.
On top of this comes a structural shift among more recent IPOs. Many of the latest listings have come to market with very ambitious valuations — often driven by future growth expectations rather than already-established revenues and profits. For a handful of winners, this model can pay off. For many others, however, it means: once the growth narrative fades, the fundamentals are missing — and share prices react accordingly sharply.
Against this backdrop, no robust, systematic tailwind for IPO investors can be identified. On the contrary: the combination of high valuations, uncertain fundamental dynamics, and a lack of structural demand argues for approaching new issues with caution — and for focusing instead on the phase after the IPO.