For years, growth stocks have led domestic equities higher. The Entrepreneur 30 Fund (NYSEArca: ENTR) is one ETF that should continue to deliver.
At its core, ENTR is a growth ETF, but it deploys a unique factor-driven methodology to deliver that growth exposure.
With the aid of AI and Thematic Research, ERShares incorporates a macro-economic, top-down approach that integrates changing investment flows, innovation entry points, sector growth and other characteristics into a dynamic, global perspective model. ENTR’s positioning as a growth play is relevant following the 2020 elections.
“High growth companies are many times benefitting from major long-term trends. Online commerce, fintech, programmatic advertising, and Artificial Intelligence are some of the notable examples of key growth drivers that are still offering enormous opportunities for expansion,” according to Seeking Alpha.
High-Quality Investment Fare
A primary advantage of ENTR’s methodology is that it turns up higher quality growth fare, to the benefit of its long-term investors.
“Since many high-quality growth stocks have widely outperformed the market in 2020, some rotation into other sectors would be no surprise, and it would even be healthy to some degree. However, trying to chase those kinds of short-term market moves can do more harm than good to your returns. Having a long-term horizon is a much sounder and more reliable strategy to maximize performance,” notes Seeking Alpha.
Growth stocks are often associated with high-quality, prosperous companies whose earnings are expected to continue increasing at an above-average rate relative to the market. They generally have high price-to-earnings (P/E) ratios and high price-to-book ratios. Still, data suggest the growth/value premium isn’t overly elevated relative to historical norms.
“Over the long term, meaning 3 to 5 years, things look very different, though. Chances are that companies with superior revenue growth and expanding profit margins will substantially outperform those that are the bigger beneficiaries of a vaccine nowadays. The longer your time horizon, the larger the chances that a high-quality stock is going to outperform a mediocre business over the holding period,” notes Seeking Alpha.
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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.