If there are two asset classes professional investors are enthusiastic about heading into 2021, it’s small-caps and international stocks. Investors can marry those concepts with the ERShares International Equity ETF (NYSEARCA: ERSX).
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-caps are forecast to notch significant earnings growth next year.
“When you have a cyclical recovery like we expect in 2021, it’s really international’s time to shine … We think it’s really important for investors to have a balance between U.S. equity exposure and international exposure as we go into the year of the vaccine for 2021,” according to JPMorgan.
Investors will have to consider how the incoming administration of President-elect Joe Biden will lay the foundation for the next phase of global leadership. Will it be predicated upon a new freedom-based trusted alliance of the U.S. and its Western and developing allies, or China and the limited techno-authoritarian network of partners it steadily cultivates?
The ERSX Strategy Is Ready for 2021
The ERShares ETF 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.
“One advantage of adding foreign stocks is they may provide a ‘smoother ride.’ This type of portfolio has increased diversification and thus, hopefully, lower volatility than a U.S. stock portfolio,” reports the Sarasota Herald-Tribune.
Increasing the allure of ERSX, 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.
Looking to the new year, international equities have increasingly become an attractive option for investors looking to generate income and pursue higher total return potential. Investors may want to take cues from institutional players today and not wait until 2021 for international allocations.
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.