Investors that haven’t yet embraced smaller stocks may not want to dither too much longer. The ERShares International Equity ETF (NYSEARCA: ERSX) is a strong option.
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.
Various data points confirm small caps remain compelling near-term bets.
“Small caps may be the biggest area of opportunity, as measured by the iShares Russell 2000 ETF (IWM — 190.30) and Russell 2000 Index (RUT — 1,911,69). With the IWM and SPY experiencing about the same performance in 2020, there is much more short-covering potential in the small-cap area relative to large-cap stocks,” according to Schaeffer’s Investment Research.
Why Small Stocks Are On the Up
With smaller stocks strengthening, short positions are being covered. That could provide a lift for some ERSX components.
“Meanwhile, short interest on Russell 2000 Index (RUT – 2,123.20) components is decreasing. From a broader perspective, total short interest on its components is nearer to multi-year highs, which leaves significant room for covering activity. Whether you are utilizing call options to speculate on individual stocks or allocating equity investments between small caps or large caps, ensure that you give the small-cap space focus,” adds Schaeffer’s.
The Entrepreneur Non-US Small Cap Index is comprised of 50 Non-US companies from around the world with market capitalization 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.
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.
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.