The bullish small-cap chorus is mounting in size and veracity, and that’s giving new life to exchange traded funds like the ERShares International Equity ETF (NYSEARCA: ERSX).
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.
With market participants increasingly bullish on smaller and cyclical stocks heading into the new year, ERSX merits consideration as a 2021 investment idea.
“The recent rotation in the equity market has made the once no-brainer decision to bet big on big tech a little more complicated” said Jacqueline Remmen, senior wealth strategy associate at UBS Private Wealth Management, according to Bloomberg.
ERSX Excellence Will Extend into 2021
Corporate America has hoarded the largest cash pile ever, potentially opening up the opportunity for greater mergers and acquisitions down the line and bolstering the case for small-cap companies and exchange traded funds.
“What we’re doing right now is really looking at what got us to where we are and knowing that what got us here won’t get us there,” said Remmen in the Bloomberg interview. “So what we’re looking at is making adjustments in the portfolio for that next leg. We do like small- and mid-caps. We do think that they are cyclical and have further room to grow as the economy reopens. And then we’re also being selective in what sectors we’re overweighting within the portfolio, like consumer discretionary, health care, financials and industrials.”
ERSX matters now because we’re in the best six-month period in which to own stocks, a time frame that has historically favored small-cap equities. Investors looking to engage with smaller stocks with less risk and higher income opportunities can consider ERSX.
Lastly, ERShares uses a deep factor-based approach to unearth opportunities with international small-cap names.
“We incorporate a proprietary investment model which applies a global, bottom-up, and top-down filtering process. Our ‘entrepreneur’ factors utilize both qualitative and quantitative criteria,” according to ERShares. “We apply our criteria to identify publicly traded entrepreneurial companies. History has shown that our model is effective across different market caps and geographical locations. We focus on management and leadership.”
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.