Investors confidence in small cap equities is soaring. ETFs like the ERShares International Equity ETF (NYSEARCA: ERSX) are capitalizing.
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.
Data confirm investors’ faith in small caps is being rewarded, in significant fashion.
“Since the stock market bottomed on March 23, the small cap Russell 2000 (^RUT) — which houses the 1,000th through 3,000th largest stocks in the market — has more than doubled, rising some 114%, while the Nasdaq (^IXIC) is up about 90% and the S&P 500 (^GSPC) has risen “just” 65% over that time,” according to Yahoo Finance.
Go-Go Days for ERSX
The Entrepreneur Non-US Small Cap Index is comprised of 50 Non-US companies from around the world with market capitalizations 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 divergence in performance among these indexes has been even more pronounced since the late-October trough during the market’s pre-election swoon. Since Nov. 1, 2020, the Russell 2000 is up 39%, outperforming both the Nasdaq and S&P 500 by more than 20 percentage points each,” notes Yahoo Finance. “And investors think this momentum will continue. In its latest global fund manager survey published Tuesday, Bank of America Global Research found the number of investors who think small caps will outperform big cap stocks in the next 12 months remains at a record high.”
Adding to the case for ERSX is that domestic large caps, in the eyes of some market observers, remain pricey. The opposite is true of many small caps, particularly those of the international variety in ERSX.
“The Russell 2000 is more weighted to sectors like financials and industrials, which are seen as winners in the beginning of economic cycles. Since Nov. 1, the KBW Bank Index (^BKX) is up nearly 40%,” adds Yahoo Finance. “The XLI ETF (XLI) that tracks the Industrial sector is up about 17% over this same period, outperforming the S&P 500 by about 2 percentage points though underperforming the overall Russell 2000. Financials and industrials each account for about 15% of the Russell’s market cap. Health care, at around 21%, is the index’s largest sector.”
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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.