05/19/97 FORGET SKYDIVING. TRY THIS IPO THRILL RIDE

FORGET SKYDIVING. TRY THIS IPO THRILL RIDE

ATTENTION, RISK-LOVERS. HERE comes a mutual fund that could be a wild ride: It invests almost exclusively in initial public offerings, a volatile arena. Up to now, the closest you could get to playing that market without buying individual IPOs, were small-cap growth funds, which often are big in IPOs.
The new fund is to be run by Renaissance Capital, a Greenwich (Conn.) boutique that specializes in IPOs but has never managed a mutual fund before. The Renaissance IPO Fund considers companies to be IPOs through their first three years in the public market.
The fund expects frequent trading, hence portfolio turnover double that of the average small-cap growth fund. Adding to the risk, the fund may buy stocks on margin and sell them short, too, according to its prospectus. Owning this fund won't be cheap. The expense ratio--its costs as a percent of assets--will be a steep 2%. Renaissance can't comment because the fund is awaiting the nod from regulators.
Still, IPOs are in a slump now, and that usually makes the stocks a relative bargain. The number of IPOs dropped to 28 in April from a peak of 120 in October. This might even make investing in the fund a little less risky.
EDITED BY LARRY LIGHT
Jeffrey M. Laderman