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Category: Innovation Technologies

Capture the Entrepreneurial Spirit of Fintech with the ENTR ETF

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Fintech is one of the premier disruptive technologies. For investors chasing access to the broader industry, the ERShares Entrepreneurs ETF (ENTR) is an exchange traded fund worthy of strong consideration.

ENTR tries to reflect the performance of the Entrepreneur 30 Index, which is comprised of 30 U.S. companies with the highest market capitalizations and composite scores based on six criteria referred to as entrepreneurial standards. ENTR primarily invests in US Large Cap companies that meet the thresholds embedded in their proprietary Entrepreneur Factor (EF).

Fintech firms are companies that are powered by innovations, working to disintermediate or bypass the current financial markets and challenge traditional institutions by offering new solutions that are better, cheaper, faster, and more secure.

Stocks in this category, including Square and PayPal, have a myriad of tailwinds. Square and PayPal are currently challenging major credit card networks, a threat that is emerging more rapidly than many industry observers expected.

ENTR 1 Year Total Return

Investing in the Future of Fintech

Entrepreneurial FinTech companies such as Square are well positioned for explosive growth through customer acquisition, retention, and redeployment.

“Once consumers have grown accustomed to using primarily digital payments, many will not revert to traditional means,” according to UBS.

Adding to the allure of ENTR is the international reach of fintech, something the ERShares fund taps into.

The accelerating adoption of digital technologies in emerging economies will open growth opportunities for investors. Fintech is the middle man in the mass trend of disruption that is currently occurring with increased digitization. Once consumers can transact without friction online, then basic analog, communications, and relationships will shift online as well. Those themes are taking shape on a global scale.

Not surprisingly, China is fertile territory for ex-US fintech opportunities. China’s household wealth will increase significantly over the next two decades and discretionary income there is on the rise. Historically, the Chinese have invested heavily in real estate and bank deposits. Now, they’re shifting to stocks.

Nevertheless, fintech in the emerging markets remains in its nascent stages. Affordability has been the major bottleneck to mass adoption, especially when compared to digital transactions in developed countries. That’s not a negative. In fact, it highlights a longer-term play for investment vehicles like ENTR.

ENTR’s Quality Growth Proposition Is Getting More Attractive

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Amid raucous market action, the bulk of which is being caused by rising Treasury yields, the ERShares Entrepreneurs ETF (ENTR) is becoming more attractive on the basis of price, while its underlying fundamentals remain sound.

ENTR tries to reflect the performance of the Entrepreneur 30 Index, which is comprised of 30 U.S. companies with the highest market capitalizations and composite scores based on six criteria referred to as entrepreneurial standards. ENTR primarily invests in US Large Cap companies that meet the thresholds embedded in their proprietary Entrepreneur Factor (EF).

See also: The Entrepreneur Factor: Distinguishing Characteristics of Dynamic, Disruptive Investing

There has been a significant shift in how companies conduct business over the last year, with many corporations transitioning their employees to the home as more stringent regulations become commonplace. With this shift comes a need for innovation, with companies like Ring, Crowdstrike, Tesla, and Fiverr embracing an entrepreneurial mindset. Investors looking to get in on the action can look to the issuer ERShares.

ERShares selects companies from all over the globe and across capitalization levels to create an eclectic and well-balanced mix in its funds.

ENTR 6 Month Total Performance

ENTR Standing Out from the Crowd

ENTR is comprised of 30 U.S. companies with the highest market capitalizations and composite scores based on six criteria referred to as entrepreneurial standards. The fund has exhibited excess return potential by taking into consideration factors that account for alpha generation, such as growth, size, momentum, and value, among others.

“Investors, or academics, that presume we are simply a ‘growth play’ or ‘momentum play’ are often surprised to discover that our Entrepreneur Factor is not only significant in explaining historical returns, but over the past 12 years has been, by far, the most significant factor,” according to the issuer. “The selection effect (Entrepreneur Factor) actually compensates for all the other factors, which in aggregate are actually negative during the time period. This is why the selection effect is even higher than the excess return itself.”

Why It Pays to Invest in Entrepreneurial Firms

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Growth stocks are suddenly on sale, and with that scenario comes opportunity for investors to embrace entrepreneurial companies at discounts. There’s an ETF for that: the ERShares Entrepreneurs ETF (ENTR).

ENTR tries to reflect the performance of the Entrepreneur 30 Index, which is comprised of 30 U.S. companies with the highest market capitalizations and composite scores based on six criteria referred to as entrepreneurial standards. ENTR primarily invests in US Large Cap companies that meet the thresholds embedded in their proprietary Entrepreneur Factor (EF).

See also: Add ‘Entrepreneurship’ to the Investment Factor Debate

History proves there are compelling reasons to invest in fashion similar to ENTR, or better yet, own the fund itself.

ENTR’s Recipe for Success

Many entrepreneurial firms are concentrated in the consumer discretionary and technology sectors, cementing ENTR’s growth feel.

ENTR 1 Year Total Return

There has been a significant shift in how companies conduct business over the last year, with many corporations transitioning their employees to the home as more stringent regulations become commonplace. With this shift comes a need for innovation, with companies like Ring, Crowdstrike, Tesla, and Fiverr embracing an entrepreneurial mindset. Investors looking to get in on the action can look to ERShares.

Joel Shulman on Bitcoin: “We’re Not Touching It Anytime Soon”

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In a recent appearance on Fox Business, Joel Shulman, CEO of ERShares, made it abundantly clear that Bitcoin wasn’t something ERShares would be investing in for the foreseeable future.

He went on to enumerate his reasoning for why: the high environmental impact of cryptocurrency mining, that Bitcoin is a potentially unreliable market in terms of protocols, that it is utilized for illicit dealings, and the illiquidity created by crypto exchanges.

“We’ve never bought [Bitcoin]… and it doesn’t look like we’re going to buy anytime soon,” Shulman said in the interview.

ESG Concerns

ERShares focuses heavily on entrepreneurial companies that demonstrate favorable environmental, social, and corporate governance (ESG) in their practices. For Shulman, Bitcoin is the “polar opposite” of ESG through the environmental impact mining has, as well as the corruption that still exists in the illicit activities and the lack of governance inherent in cryptoassets.

When elaborating, Shulman referenced Inner Mongolia shutting down mining operations due to the energy consumption and emissions it produces. An autonomous region of China, Mongolia has been under pressure by China to curb energy consumption since 2018, per CoinDesk. Inner Mongolia accounts for 8% of the global mining hash rate; in a bid to reduce emissions, it will cut all crypto mining, a notoriously energy-consuming process with a large carbon footprint.

Shulman also pointed to Bitcoin’s connection to illegal activity. He referenced the “extortion that’s going on with the (Colonial) pipelines,” noting that “the FBI is involved.”

Colonial Pipeline, which operates the largest pipeline in the U.S., was forced to shut down operations on May 7 after being hacked. The hackers demanded and were paid $5 million in cryptocurrency.

Water Stock Fears and Illiquidity

Bitcoin has fallen 50% from it’s recent high, though a recent tweet by Elon Musk has it rebounding somewhat of late.

When asked if he would be buying Bitcoin in a market that is moved by Elon Musk’s tweets, Shulman said “absolutely not.” The concern, he said, is “if they start changing protocol, it raises the issue of potentially being like watered stocks in the 1860’s when Cornelius Vanderbilt was scammed by Jay Gould.”

In 1869, Gould sold over $7 million in ‘watered stocks’, or stocks with artificially inflated value, to Vanderbilt to purchase the Erie Railroad. Vanderbilt was one of the most successful and wealthiest of his time, demonstrating that even the wealthy are not immune to misjudgments and fraud.

Shulman also expressed concerns about the illiquidity of exchanges in Bitcoin right now.

“Coinbase is charging egregious fees” each time investors buy or sell, he said.

The CoinBase website details the fees that could possibly be incurred at each step, including the initial transaction fee on the network, the 0.5% spread on the sale, a second possible fee that is either flat or a percentage of the transaction outside of the spread, as well as potential charging fees on transfers to and from a customer’s bank.

“There are a lot of problems with [Bitcoin]. We’re not touching it any time soon,” concluded Shulman.

‘Blue Skies Ahead’ for Investors: ERShares’s Ados on Coinbase Success and Equity Market Growth

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Coinbase’s record direct public offering (DPO), favorable equity markets, and increased cashflow into the marketplace add up to a good environment for investors, according to Eva Ados, COO and Chief Investment Strategist of ERShares, in an interview with Yahoo! Finance.

Coinbase (Nasdaq: COIN) was the biggest DPO in history; within the first 10 minutes of trading on Wednesday, April 14th, it had reached $105 billion of market capitalization.

“To put that in perspective, that’s 4 times the Nasdaq and 1.5 times the NYSE,” said Ados.

It is important to remember, added Ados, that Coinbase is also an exchange, which means it can trade 50 cryptocurrencies at a time.

It’s “a great entrepreneurial growth story” that shows potential for the future for crypto assets and exchanges, she added.

See also: Canadian Cryptocurrency ETFs Are Showing Monster Trading Volumes

Optimism Extending to the Broader Market

Elsewhere in the market, Ados believes that Fed support, good earnings announcements, low unemployment numbers, persistently low interest rates, and vaccination rollouts will all lead to a strong economic comeback, especially in the tech sector.

The “least risky category” in tech, said Ados, are the FAANGs, which are showing 10% growth year-to-date. Other opportunities lie in “hyper-growth” companies with strong earnings, such as Square (NYSE:SQ) and Roku (NASDAQ: ROKU), and even hyper-growth companies with no or negative earnings, such as Cloudflare (NYSE:NET). One-third of the U.S. tech sector is compromised of hyper-growth companies with no earnings, said Ados.

She also stated that bond rates may have overshot and will continue to drop as they course-correct, with Fed support. Bond market yields, she noted, are coming down; the yield on 10-year Treasury notes was down to 1.58%, from 1.64% the previous week. “We believe it’s not a good time to be in the fixed income space,” said Ados, adding that flows are moving toward equity markets.

ERShares isn’t currently concerned with inflation, with Ados stating that they may pay closer attention as the year draws to a close. But with support from the Fed and the recent round of stimulus payments helping to bolster the economy, there is increased cash flow to the markets. Record numbers of retail accounts with Robinhood and Schwab have been opened as Millennials flock to tech stocks—especially the “growth stories that Millennials love”—all adding more money to the marketplace, she added.

There’s nothing but “blue skies ahead. It’s a great time to be an investor,” concluded Ados.

AI Exposure with ‘ENTR’: Analyzing Alphabet, NVIDIA, and More

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Artificial intelligence (AI) isn’t just a standalone investment theme; it’s a technology that could potentially “expedite the automation and cost-saving of every industry” through a deep learning revolution, according to ERShares.

ERShares’s flagship fund, the ERShares Entrepreneurs ETF (ENTR), offers exposure to a range of disruptive technology sectors—including robotics and AI.

With its emphasis on high growth companies driven by strong leaders, ENTR offers access to several AI-driven stocks with an entrepreneurial twist.

For more news, information, and strategy, visit the Entrepreneur ETF Channel.

Alphabet

For example, Alphabet (Nasdaq: GOOGL), has robust robotics and AI divisions working to integrate both technologies into everyday life.

Via TensorFlow, an open source end-to-end machine learning platform, Google has endeavored to make its own machine learning platforms accessible to both beginners and experts, as well as an extensive library and models for experimenting with, per the TensorFlow website.

In addition, Google’s Gradient Ventures, a venture fund that is AI-focused, targets early-stage tech start-ups. It utilizes Google’s experience as tech founders and entrepreneurs to help tech start-ups launch successfully. To date, Gradient Ventures has funded over 67 start-ups ranging across industries from fintech and insurtech, to healthcare and life sciences, per the Gradient Ventures website.

Though Alphabet is a massive company, it remains entrepreneurial in spirit, through consistent leadership by co-founders Larry Page and Sergey Brin, who remain board members and controlling shareholders, and by its commitment to support tech start-ups. Currently ENTR holds 7.09% of its portfolio in Alphabet.

NVIDIA

Another robotics and AI mainstay is computing hardware manufacturer NVIDIA (Nasdaq: NVDA), which was co-founded by current President and CEO Jen-Hsun “Jensen” Huang.

NVIDIA’s graphics cards power the machinery of everyday life, from computers to cell phones; the company makes powerful graphics processing unites (GPUs) dedicated to artificial intelligence and deep learning applications. The company has also developed a massive cloud-based software suite to bring artificial intelligence applications into enterprise settings.

ENTR holds 3.57% of its portfolio in NVIDIA.

FedEx

Finally…Fedex?

Yes, FedEx (NYSE: FDX), the delivery company, has integrated AI and robotics into every step of its delivery and sorting models.

Founded by current chairman and CEO Frederick Smith, FedEx has also partnered with several other companies to stay on the cutting edge of technology in its industry.

One such partnership is with Mercedes-Benz Vans to develop Coros, an AI package delivery tracking system. Coros, or Cargo Recognition and Organization System, is installed into the cargo space of the delivery vehicles and utilizes automatic barcode scanning and cameras to track packages in the cargo hold, giving real-time updates on their whereabouts. It also helps optimize sorting by using an LED system that indicates prime package placement.

FedEx Express has also partnered with Plus One and Yaskawa to install four robotic arms for sorting small packages and letters in its Memphis hub, per the FedEx website. This technology is among the first in its industry and is working to increasingly automate and enhance performance.

ENTR holds 3.8% of its portfolio in FedEx.