There’s clear strength among small cap equities, and one of the obvious leaders of that trend is the ERShares NextGen Entrepreneurs ETF (ERSX).
ERSX selects the most entrepreneurial, primarily Non-US Small Cap companies, that meet the thresholds embedded in its proprietary Entrepreneur Factor (EF). ERShares’ ETF delivers compelling 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.
Signs abound that ERSX is the right idea right now for investors seeking small cap exposure.
“Small-cap dominance should remain as long as virus mutations don’t render COVID vaccines useless and the surge in Treasury yields does not get out of control,” said Edward Moya, a senior market analyst with OANDA, in an interview with S&P Global Market Intelligence.
Don’t Limit Yourself to Domestic Fare
ERSX isn’t any old small cap ETF. It blends domestic and international exposure, which is relevant at time when many markets are betting international smaller stocks will top U.S. equivalents. Non-U.S. equities are poised to take flight, and it’s possible that this asset class is in for a substantial period of out-performance.
“When nominal GDP growth climbs above 5%, small caps outperform large-cap stocks about 63% of the time, according to data from Royce Investment Partners. Small-cap stocks have outperformed their large-cap peers by an average of 4.4% during these times, the data show,” adds S&P Global.
One of the highlights of small cap equity investing is the ability to capitalize on value-added growth companies that can provide room for more future gains. On the opposite end of the spectrum, large cap equities like big tech stocks may have already reached their peaks.
“Top individual stocks on small-cap indexes have also outperformed those on large-cap indices by a significant margin. Since the start of the year, the 10 top-performing stocks on the S&P 600, for example, have increased by an average of 123.27%, while the top 10 on the S&P 500 have increased by an average of 55.48%,” concludes S&P Global.
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.