The Entrepreneur 30 Fund (NYSEArca: ENTR) is one exchange traded fund that gives investors prime entry to companies run by founders and those with deep entrepreneurial spirits.
The Entrepreneur 30 Fund 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 is considered a large-cap growth ETF, a good status to have in recent years.
“Large-growth funds invest in stocks of big U.S. companies that are projected to grow faster than other large-cap stocks. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large-cap. 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 Morningstar.
ENTR’s Growing Relevance
“We incorporate a proprietary investment model which applies a global, bottom-up filtering process. Our 15 ‘entrepreneur’ factors utilize both qualitative and quantitative criteria,” according to EntrepeneurShares. “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.”
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. Growth stocks 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.
Growth stocks may be seen as exorbitant and overvalued, causing some investors to favor value stocks, which are considered undervalued by the market. Value stocks tend to trade at a lower price relative to their fundamentals (including dividends, earnings, and sales). Despite generally solid fundamentals, value stocks are considered bargain-priced when compared with their competitors.
ENTR is a multi-factor play, but it doesn’t focus on momentum, size, or volatility. The factors screened include management, which requires set factors regarding a company’s management must be met for a company to be included, such as the turnover among the top five executives within a company as compared to other companies in the broader universe.
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.