Some market observers still see plenty of fire in the small cap rally, particularly with growth fare, a scenario that bodes well for exchange traded funds such as 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.
“The smallest companies on Wall Street have had a remarkable run over the past few months, and they still have a long way to go to catch up with the stock market’s giants,” reports Business Insider. “The companies with the largest market capitalizations ruled the world throughout the last bull market, which was historically long. But with a new cycle underway, a lot of experts think small and medium-size companies look more promising right now. It helps that after a bull market of more than a decade, they’re much less expensive.”
Upside Ahead for ERSX?
ERSX tracks a fundamental-selected index of global small cap ex-US equities weighted by market capitalization. The fund’s index is benchmarked against the FTSE All-World Ex-US Small Cap Index, a market-capitalization weighted index representing small cap stocks’ performance in developed and emerging markets excluding the US. The index is derived from the FTSE Global Equity Index Series (GEIS), which covers 98% of the world’s investable market capitalization.
ERSX has multiple tailwinds. “The small-cap Russell 2000 index had its best month ever in November, followed by a very strong December, and it kept right on going after that,” reports Business Insider. “Even compared with a major index like the S&P 500, there are a lot of options in the small-company space. With that as a backdrop, RBC Capital Markets is updating its list of high-conviction small-cap ideas.”
Small cap investors already know that looking at equities outside the large cap universe can yield substantial gains, but one area they may not have considered is looking abroad. International small caps are generally export-oriented, globally structured, innovative, and have a high to dominant share of a niche market, often one in which the U.S. counterparts don’t compete effectively.
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.