How a Big Tech Boost Bumps Up 'Entrepreneurial' ETFs

Electoral uncertainty didn’t derail technology stocks in the first post-election trading day. That could signal upside ahead for the Entrepreneur 30 Fund (NYSEArca: ENTR).

ENTR YTD Performance

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.

As a large growth fund, ENTR features robust technology exposure, something that could serve investors heading into next year.

Covid-19 will continue to force us to adapt to a new normal where technology plays an even larger part in our lives as social distancing measures continue amid the pandemic. As such, exchange-traded fund (ETF) investors looking for either short- or long-term opportunities can keep on riding the technology wave.

How Can an ETF Be ‘Entrepreneurial’?

“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. 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.

The world is changing faster than ever before. Entire industries are being reshaped, and new industries are being created. ENTR provides a unique platform for investors looking to tap into disruptive technologies without a full commitment to that style.

Technology is a secular theme that provides investors exposure to companies that have grown their earnings, revenues and dividends since 2003, which have outpaced the growth for S&P 500 companies. That bodes well for the long-term efficacy of ENTR.

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.