For years, the the preferred avenue to engineer growth was to acquire others and bloat balance sheets in the process. But as markets change, organic growth is becoming more important. The Entrepreneur 30 Fund (NYSEArca: ENTR) is an example of an exchange traded fund investors can use to tap into the theme of organic growth.
The Entrepreneur 30 Fund 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).
ERShares CIO and Managing Partner and Professor Joel Shulman points out that it’s advantageous for investors to focus on organic growth over acquired growth and that many ENTR components are growing in organic fashion.
“If you strip out the 30 companies from the S&P 500, you’ve got our guys growing 20%+ per year in employee growth, while the S&P 500 has essentially flattened or gone negative. The S&P are hiring and firing, while our guys are growing organically,” said Shulman.
Vaccine Leverage for the ENTR ETF
In addition to its organic growth exposure, ENTR offers investors considerable leverage to positive developments on the coronavirus vaccine front, an important hallmark as a vaccine could come to market over the near-term.
“Growth is back to the leaderboard because these guys are creating new revenues, and they’ve disrupted. Whether Covid goes away in a month, six months, or a year, we’ve gotten through behavioral changes that are not going to go back,” said Shulman.
ENTR is also positioned to capitalize on emerging trends, such as e-commerce and working from home.
“People aren’t going to be getting on a plane anytime soon,” adds Shulman. “They are going to go to business meetings like they used to, as they’ll be doing Zoom meetings. There’s been structural changes with a lot of these companies that have benefited the Wayfairs and the Zooms and the Peletons, and that’s not going to switch back anytime soon.”
For more on entrepreneurial strategies, visit our Entrepreneur ETF Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.