Small-cap equities are coming off an epic November, a showing that’s bringing the ERShares International Equity ETF (NYSEARCA: ERSX) into the spotlight.
ERSX tracks 50 non-U.S. companies from around the world with market capitalizations between $300 million and $5 billion USD and the highest rank based on the six investment style factors. Small-caps are forecast to notch significant earnings growth next year.
On a historical basis, the November run for small-caps was impressive and could set the stage for ERSX to rally into year-end and beyond.
The November “advance outdistanced the previous record set in February 2000 amid the collapse of the dot-com bubble and waning large-cap dominance. The small-cap index also outpaced the Russell 1000’s 11.8% increase in November, narrowing its performance gap with its large-cap counterpart for the year (up 10.4% versus 16.1%, respectively),” according to FTSE Russell.
In the World of Small-Cap ETFs, What Sets ERSX Apart?
In a growing small-cap space, ERSX stands alone due to its factor-rich methodology.
The ERShares ETF selects the most entrepreneurial, primarily non-U.S. small-cap companies, that meet the thresholds embedded in their proprietary Entrepreneur Factor (EF). ERShares’ ETF delivers strong performance across a variety of investment strategies without disrupting investors’ underlying risk profile metrics. Their geographic diversity enables them to harness global advantages through additional returns associated with currency fluctuations, strategic geographic allocations, comparative trade imbalances, and relative supply/demand strengths.
Much of the recent ebullience for small-caps stems from the removal of political uncertainty and encouraging developments on the coronavirus vaccine front.
“The Russell 2000’s banner November comes amid a raft of positive vaccine news, a fast-track approval process for distribution and easing uncertainties around the US presidential transition,” notes FTSE Russell.
Bolstering the case for ERSX are attractive multiples on small-caps and expectations that earnings growth in 2021 will check in around 40%, well in excess of large-cap benchmarks.
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.