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Tag: Large Cap

Procure the Entrepreneurs: The Enterprising ENTR ETF

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Treasury yields are rising, making an already tricky fixed income environment all the more thorny to navigate. Some investors may want to consider ditching government bonds in favor of entrepreneurial companies with the ERShares Entrepreneurs ETF (ENTR).

ENTR 3 Year Performance

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).

In a recent interview with financial news network Cheddar, ERShares’ Joel Shulman outlined the case for entrepreneurial companies in the current climate, noting “that interest rates are still low based on historical levels and actually need to rise a little in order for the Fed to deploy future monetary policy solutions. He reminds listeners that between 2003-2007 the Fed actually had 18 rate hikes while the Markets appreciated 50%,” according to ERShares.

A Powerful Paradigm Shift for Entrepreneurial Investors

The ETF “incorporates a bottom-up investment orientation, powered by artificial intelligence (AI), that stands above other investment factors such as: momentum, sector, growth, value, leverage, market cap (size) and geographic orientation. Moreover, with the aid of AI and Thematic Research, ERShares incorporates a macro-economic, top-down approach that integrates changing investment flows, innovation entry points, sector growth and other characteristics into a dynamic, global perspective mode,” according to ETFdb.com.

Adding to the case for ENTR is that last week’s market selloff caused by rising Treasury yields was perhaps overdone when it comes to equities.

Shulman notes “that much of the market’s response to interest rate spikes is appropriate for the bond markets, but may have been an overreaction for equities.”

An Equity Decline is Just Fine for This Entrepreneurial ETF

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A Treasury market gone haywire is weighing on riskier assets, but equity declines could bring opportunity with 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).

The Entrepreneur Factor

ENTR selects the most entrepreneurial, primarily US Large Cap companies, that meet the thresholds embedded in the ERShares proprietary Entrepreneur Factor (EF).

There has been a thematic approach to investing in entrepreneurs. Investors can tap into the entrepreneurship economy with a targeted strategy to enhance an investment portfolio with quickly rising companies.

So, what is an entrepreneurial company, and how is it different from others? Entrepreneurial companies are led by a main founder. From decades together, founder-run Entrepreneurial companies have shaped the economy by investing in their people and in general innovation, leading to exceptional growth. Many entrepreneurial companies are run by Founder-CEOs.

Their presence is reflected in the company’s performance, and having the right Founder-CEO can make an important difference. The differential between the period with the Founder-CEO still in the company and the period without the founder is approximately 7% in excess return. Entrepreneurs typically provide the difference between success and failure and wealth creation versus wealth destruction. In another sense, disruptive innovation moves at a rapid pace, and only the most capable leaders survive.

ENTR 1 Year Performance

Why Growth Is Offering More Value than Meets the Eye

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For the first time in what feels like an eternity, value stocks are topping their growth rivals, but investors can avoid value clunkers and bet on a growth trajectory with the ERShares Entrepreneurs ETF (ENTR).

The ERShares fund is worth a look over the near-term because its growth stocks are offering surprising levels of value.

“With the market keeping a keen eye on interest rates and its focus on punishing high-flying growth stocks with every basis point increase in the 10-year treasury, it’s sometimes useful to take a step back and examine the big picture,” said ERShares founder Joel Shulman in a recent note. “While it’s true that stocks, of all kinds (growth and value), are fundamentally priced based on discounted future cash flows, it should not necessarily be true that growth stocks should receive a steeper drop in price with rising interest rates. While the basic math of reducing today’s stock price based on discounting future cash flows at a higher rate cannot be denied, neither can the fact that the PRIMARY driver in growth stock valuation is the GROWTH itself.”

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).

ENTR All Time Performance

ENTR: A Prime Avenue for the Growth Rebound

“When businesses enter their hyper-growth phase, they enter an extremely uncertain period and seasoned analysts should already discount future cash flows at an appropriate level corresponding to the risk,” adds Shulman.

“The key drivers to the valuation of growth stocks correspond overwhelmingly to the top-line revenue growth (that can exceed 100% rate per year) and should not, from the same mathematical perspective be affected by relatively immaterial or insignificant 5-10 basis point increases in a discount rate.”

The bottom line is thus: recent weakness in growth stocks may be an overreaction to rising Treasury yields.