Domestic small-cap stocks are on torrid paces of late, but investors shouldn’t snooze on their international equivalents. The ERShares International Equity ETF (NYSEARCA: ERSX) is one of the few ETFs to marry both U.S. and ex-US small stocks under a single exchange traded fund.
International small caps are often less volatile and more attractively valued than their U.S. counterparts. Adding to the case for ERSX is that the ETF, more so than its peers, blends growth and value stocks.
“Foreign small-/mid-growth portfolios invest in international stocks that are smaller, growing faster, and higher-priced than other stocks. These portfolios primarily invest in stocks that fall in the bottom 30% of each economically integrated market (such as Europe or Asia ex-Japan). Growth is defined based on fast growth (high growth rates for earnings, sales, book value, and cash flow) and high valuations (high price ratios and low dividend yields),” according to U.S. News and World Report.
ERShares’ Proprietary Entrepreneur Factor (EF)
The ERShares ETF 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.
ERSX benefits go beyond a superior methodology.
“International small-cap stocks have generally generated greater gains than their corresponding large-and mid-cap counterparts over short-, medium-,and long-term periods,” notes S&P Dow Jones Indices. “Although higher historical returns in this size segment have not been associated with higher risk over the three-and five-year periods, standard deviations are understandably somewhat greater over longer periods.”
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.