The Entrepreneur 30 Fund (NYSEArca: ENTR) focuses on both growth and value stocks, selecting the best of both world’s that’s helped its impressive year-to-date performance.
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.
Past performance doesn’t guarantee future returns, but growth’s lengthy run indicates ENTR merits consideration as a long-term idea.
“Growth stocks have whupped value stocks over the past five years. Through Friday, the Morningstar Large Growth Stock Index had gained 15.46%, with Large Value at 10.96%. That annual gap of 4.5 percentage points leads to a big cumulative difference–a 105% profit for Large Growth, as opposed to 68% for Large Value,” according to Morningstar.
ENTR’s Structure Built for the Future?
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
“Classic investment theory cannot answer the question,” notes Morningstar. “The capital asset pricing model, or CAPM, theorizes that, because growth companies have higher betas than value stocks, they will lead during a bull market. In practice, this is only slightly correct. Growth companies do tend to outperform when stock prices rise (and drop further when prices decline), but by a much smaller margin than CAPM suggests.”
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 primarily invests in US Large Cap companies, that meet the thresholds embedded in their proprietary Entrepreneur Factor (EF).
Since the fund invests in the best of both growth and value stocks, the outlook is bright for ENTR.
“There is a chance that growth stocks will lead the way over the next five years, as they have done for the past half-decade. At least within technology, the biggest winners appear to be strengthening their positions, not losing them. Those handful of global leaders might carry growth stocks on their backs for a few more years,” according to Morningstar.
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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.