Russell warns mega IPOs could crowd portfolios

Binaya Dahal

Journalist

4 June 2026

Russell Investments’ Christina Shockley and Dylan Kelly have warned the looming wave of mega IPOs could turn years of private market gains into concentrated public equity exposures, raising the risk of portfolio crowding.

The remark comes as some of the world’s largest privately held companies, including SpaceX and OpenAI, have filed IPOs after years in which investors have accumulated exposure through venture capital funds, growth mandates and GP structures.

Shockley, director of customised portfolio solutions at the $401 billion manager, and Kelly, senior portfolio manager in overlay solutions, said those positions have often appeared well diversified within private market portfolios due to infrequent valuation updates, structural illiquidity and aggregation across multi-asset vehicles.

However, they warned that this perceived diversification can quickly reverse once companies list, as long-held private stakes re-emerge as large single-name positions in public equity portfolios.

“The challenge is no longer simply participating in the upside. It is managing what happens after those private gains enter public markets,” they said. “A successful private markets investment can quickly become a much harder public markets position to manage.”

Attention has increasingly shifted toward so-called mega venture deals, defined as financings above $100 million, which accounted for around 70% of US VC deal value in 2025, up from 56% a year earlier.

The scale of expected listings could also make the next IPO cycle structurally different, with companies such as SpaceX reportedly discussing valuations approaching $2 trillion.

Russell’s trading data suggests only 28% of stocks trade at or above their initial distribution price on the first day, while nearly 48% recover that level within 30 days.

Historical listings such as Uber and Pinterest show that volatility can persist well beyond debut, particularly around earnings cycles and lock-up expirations as early investors distribute shares into public markets.

“Volatility, selling pressure, and delayed liquidity can leave portfolios exposed to meaningful short-term swings just as concentration and implementation risks become more visible,” they said.

They added that for investors holding private stakes through venture funds or GP structures, lock-up restrictions and distribution timing can delay when shares become tradable, complicating rebalancing decisions after listing.

The manager said institutions may need to treat IPOs as active portfolio events rather than liquidity milestones, with hedging, rebalancing and benchmark adjustments considered ahead of listing.