Major small-cap benchmarks surged in November, giving rise to gains for exchange traded funds like the ERShares International Equity ETF (NYSEARCA: ERSX). Many market observers believe the trend will continue as more positive progress emerges on the coronavirus vaccine front.
ERSX tracks 50 non-U.S. companies from around the world with market capitalizations between $300 million and $5 billion USD and the highest rank based on the six investment style factors.
“Small cap stocks have far outperformed their larger counterparts in November en route to their best monthly performance on record, and look set to remain Wall Street leaders as companies poised to benefit from an economic recovery,” reports Reuters.
ERSX Gives Investors Vaccine Leverage
There has been some debate as to exactly when COVID vaccines will be available. President Trump has said that vaccine deliveries will begin “in the next week or the week after,” while director of the FDA’s Center for Biologics Evaluation and Research a day earlier suggested a dramatically different time frame.
The FDA’s Vaccines and Related Biological Products Advisory Committee are now discussing the application from Pfizer. Vaccinations will begin in the US “towards the latter part of December,” according to Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases.
Small companies stand ready to regain lost momentum.
The ERShares ETF selects the most entrepreneurial, primarily non-U.S. 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.
“The Russell 2000 and S&P 600 indexes of small cap stocks are up more than 19% for the month – the biggest monthly percentage jump for both indexes, which date back to 1979 and the end of 1993, respectively – as investors bet recent positive trial results for COVID-19 vaccines will help pull the economy out of a recession,” according to Reuters. “While smaller names typically see outsized price moments compared to their larger brethren, the small cap gains for November have nearly doubled the roughly 11% gain in the S&P 500 this month (November).
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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.