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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.