Assessing the Viability of Goldman Sachs' Liquid IPO Index as a New Benchmark for Growth Investing

The U.S. IPO market has long been a barometer of economic optimism and innovation. In 2025, this optimism is palpable, with $32 billion raised through initial public offerings (IPOs) year-to-date—a 50% increase compared to 2024Goldman Trading Desk Launches Liquid IPO Basket as Listings Soar, [https://www.bloomberg.com/news/articles/2025-09-19/goldman-trading-desk-launches-liquid-ipo-basket-as-listings-soar-mfr56xpm]^[1]. Against this backdrop, Goldman Sachs introduced the Liquid IPO Index, a tool designed to track the performance of recently listed companies that meet stringent liquidity and market capitalization criteria. This article evaluates the index's viability as a growth investing benchmark, contextualizing it within the evolution of IPO market structures and historical performance trends.

Market Structure Evolution: From Crisis to Resilience

The post-2008 financial crisis era reshaped IPO dynamics. In 2008, just 62 U.S. IPOs occurred, reflecting investor caution and economic uncertaintyIPO Statistics and Charts - Stock Analysis, [https://stockanalysis.com/ipos/statistics/]^[2]. By 2021, however, the market surged to 1,035 IPOs, fueled by SPACs and tech-driven optimismIPO Statistics and Charts - Stock Analysis, [https://stockanalysis.com/ipos/statistics/]^[2]. Yet, this momentum faltered in 2022–2023, with total proceeds hitting historic lows of $27 billion over two yearsIPO Statistics and Charts - Stock Analysis, [https://stockanalysis.com/ipos/statistics/]^[2]. The rebound in 2024–2025, marked by 396 IPOs and $24 billion in proceeds in 2024 aloneIPO Statistics and Charts - Stock Analysis, [https://stockanalysis.com/ipos/statistics/]^[2], underscores a cyclical recovery.

Goldman Sachs' Liquid IPO Index emerges during a pivotal phase. The index targets companies that have traded for over 30 days, with a minimum $5 million daily volume and $750 million average market capitalizationGoldman Trading Desk Launches Liquid IPO Basket as Listings Soar, [https://www.bloomberg.com/news/articles/2025-09-19/goldman-trading-desk-launches-liquid-ipo-basket-as-listings-soar-mfr56xpm]^[1]. This design addresses a critical gap: capturing liquidity and scalability in newly public firms, which often underperform or face volatility in their early trading days. By excluding restricted stocks and focusing on established liquidity, the index aims to mitigate the risks associated with “hot” IPOs that cool rapidly post-listing.

The Liquid IPO Index vs. Existing Benchmarks

The IPOX 100 U.S. Index (IPXO) has long been a benchmark for growth investing in IPOs. It tracks the top 100 largest and most liquid U.S. IPOs, spin-offs, and select acquirers, including heavyweights like Palantir Technologies and DoorDashIPOX® 100 U.S. Index — IPOX, [https://www.ipox.com/ipox-100-us-index]^[3]. As of H1 2025, the IPOX 100 surged by +20.90%, outperforming the S&P 500 and Nasdaq 100IPOX® 100 U.S. Index — IPOX, [https://www.ipox.com/ipox-100-us-index]^[3]. Its quarterly rebalancing ensures exposure to the largest, most liquid listings, but its focus on “top 100” firms may exclude smaller, high-growth companies still building momentum.

In contrast, the Liquid IPO Index offers broader inclusion. By systematically rebalancing to incorporate new IPOs, it captures a more dynamic cross-section of the market. For instance, in September 2025, the index would have included high-profile listings like Reddit and Stripe, which demonstrated strong first-day performanceGoldman Trading Desk Launches Liquid IPO Basket as Listings Soar, [https://www.bloomberg.com/news/articles/2025-09-19/goldman-trading-desk-launches-liquid-ipo-basket-as-listings-soar-mfr56xpm]^[1]. This adaptability aligns with the current macroeconomic environment: the GS IPO Issuance Barometer, a Goldman Sachs-developed metric, rose to 93 in 2025—up from a trough of 7 in 2022—indicating favorable conditions for IPOsThe economic backdrop for IPOs in the US is improving, [https://www.goldmansachs.com/insights/articles/the-economic-backdrop-for-ipos-in-the-us-is-improving]^[4]. Factors such as stabilizing stock prices, CEO confidence, and the anticipated end of the Fed's rate-hiking cycle have all contributed to this improvementThe economic backdrop for IPOs in the US is improving, [https://www.goldmansachs.com/insights/articles/the-economic-backdrop-for-ipos-in-the-us-is-improving]^[4].

Viability for Growth Investing: Strengths and Risks

The Liquid IPO Index's viability hinges on its ability to balance innovation exposure with risk management. Historically, IPOs have exhibited mixed performance. For example, during the 2000–2002 tech bubble, many IPOs underperformed the broader market, while post-COVID-19 recoveries saw tech-driven IPOs outperformFresh IPO Stocks and Indexes: In or Out? [https://www.msci.com/research-and-insights/blog-post/fresh-ipo-stocks-and-indexes-in-or-out]^[5]. The Liquid IPO Index's liquidity filters aim to reduce downside risk by focusing on firms with robust fundamentals and trading volumes.

However, the index faces challenges. Unlike the IPOX 100, which has a track record of strong returns (e.g., 51.46% 1-year return as of March 2025IPOX® 100 U.S. Index — IPOX, [https://www.ipox.com/ipox-100-us-index]^[3]), the Liquid IPO Index lacks publicly available performance data for 2023–2025. While Goldman Sachs' 2024 annual report notes a 52% total shareholder return for the year2024 Annual Report - Goldman Sachs, [https://www.goldmansachs.com/investor-relations/financials/current/annual-reports/2024-annual-report]^[6], this figure reflects firm-wide performance, not the index itself. Investors must rely on indirect indicators, such as the GS IPO Issuance Barometer and sector-specific trends, to gauge its potential.

Strategic Implications for Investors

For growth investors, the Liquid IPO Index offers a compelling complement to traditional benchmarks. Its focus on liquidity and systematic rebalancing makes it well-suited for portfolios seeking exposure to innovation-driven sectors like AI, clean energy, and fintech. However, its viability as a standalone benchmark depends on transparency in performance metrics and alignment with macroeconomic shifts.

The IPOX 100 remains a stalwart for large-cap IPOs, but the Liquid IPO Index's broader inclusion criteria may appeal to investors seeking diversification across growth stages. As the Fed's rate-cut cycle progresses and IPO activity accelerates—particularly in TMT sectors—the index could gain traction as a proxy for the “new economy.”

Conclusion

Goldman Sachs' Liquid IPO Index reflects the evolving priorities of growth investors: liquidity, adaptability, and exposure to high-potential sectors. While its performance data remains opaque, its structural design and alignment with favorable macroeconomic conditions position it as a credible benchmark. Investors should view it as part of a diversified strategy, paired with rigorous due diligence on individual holdings. In a market where IPOs are once again signaling optimism, the Liquid IPO Index may well become a cornerstone for capturing the next wave of innovation.