A Treasury market gone haywire is weighing on riskier assets, but equity declines could bring opportunity with the ERShares Entrepreneurs ETF (ENTR).
ENTR tries to reflect the performance of the Entrepreneur 30 Index, which is comprised of 30 U.S. companies with the highest market capitalizations and composite scores based on six criteria referred to as entrepreneurial standards. ENTR primarily invests in US Large Cap companies that meet the thresholds embedded in their proprietary Entrepreneur Factor (EF).
The fund also includes sophisticated screens to weed out undesirable companies. The factors screened include management, which requires set factors regarding a company’s management, such as the turnover among the top five executives within a company compared to other companies in the broader universe. A profitability screen requires a company to meet predetermined criteria regarding net income over a static threshold to be included, including the company’s net income as compared to predetermined benchmarks.
The Entrepreneur Factor
ENTR selects the most entrepreneurial, primarily US Large Cap companies, that meet the thresholds embedded in the ERShares proprietary Entrepreneur Factor (EF).
There has been a thematic approach to investing in entrepreneurs. Investors can tap into the entrepreneurship economy with a targeted strategy to enhance an investment portfolio with quickly rising companies.
So, what is an entrepreneurial company, and how is it different from others? Entrepreneurial companies are led by a main founder. From decades together, founder-run Entrepreneurial companies have shaped the economy by investing in their people and in general innovation, leading to exceptional growth. Many entrepreneurial companies are run by Founder-CEOs.
Their presence is reflected in the company’s performance, and having the right Founder-CEO can make an important difference. The differential between the period with the Founder-CEO still in the company and the period without the founder is approximately 7% in excess return. Entrepreneurs typically provide the difference between success and failure and wealth creation versus wealth destruction. In another sense, disruptive innovation moves at a rapid pace, and only the most capable leaders survive.
For more investing ideas, 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.