Why a Democratic Majority Will Boost Small Caps Like 'ERSX' | ETF Trends

Amid a small cap rally with plenty of substance, the ERShares International Equity ETF (NYSEARCA: ERSX) is growing increasingly appealing. Plus, it has some political tailwinds.

ERSX selects the most entrepreneurial, primarily Non-US 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.

Many market observers are wagering that with Democrats controlling the White House and both houses of Congress, small caps will continue to soar.

“We think the Democratic sweep should further support small caps, relative to large caps,” said Pamela Woo, head of US and global thematic equities at BNP Paribas. “After the vaccine efficacy was announced in the fourth quarter [of 2020], it was a strong one for small caps. Given the expectations for earnings recovery and the economic stimulus, we think small caps have more road to run.”

ERSX 1 Year Performance

ERSX Could Be a Star in 2021

The Entrepreneur Non-US Small Cap Index is comprised of 50 Non-US companies form around the world with market capitalization based between $300 million and $5 billion USD.

While small cap value appears to be solidifying, that doesn’t mean small cap growth is going to lag. Fortunately ERSX addresses both factors.

“With six days to go until the inauguration of Joe Biden as the next president of the US, representatives for BNP Paribas believe the markets have priced in the results of the election and that the Democratic sweep of the presidency, Senate and House of Representatives increases the likelihood of further government stimulus passing quickly,” reports Ben Ashwell for IR Magazine.

The ERShares ETF 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.

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.