Leadership matters in the world of business. ETF investors can explore portfolio strategies that capitalize on this proprietary “Entrepreneur Factor.”
In the recent webcast, Leadership Matters: Why Strong Leaders Make Profitable Companies, Dr. Joel Shulman, Founder, Managing Partner & CIO, ERShares, noted that historically, entrepreneurs have driven innovation and influenced the economy. Prominent examples include Henry Ford of Ford Motor Company and, more recently, Jack Dorsey of Twitter.
“High-performing organizations are led by mission driven leaders. This helps in strategic alignment over business strategy leading to purposeful innovation,” Eva Ados, COO and Chief Investment Strategist, ERShares, said.
Ados argued that focused endeavors through mission-driven initiatives lead to innovations touching every aspect of people’s lives, such as Fiverr, which has lifted the geographical borders for human resources teams and allowed people to make best use of their time and talents.
“According to ERShares’ research, from decades together entrepreneurial companies have shaped the economy by investing in its people and in innovation leading to exceptional growth,” Ados said.
Specifically, Ados said that entrepreneurial leaders can create fundamental value as these visionary entrepreneurial leaders have economic and non-economic incentives to create value. These leaders see far horizons and are resilient in tough times. Their organizations keep costs lean, debt levels manageable, and expansion projects within reach.
Entrepreneurial companies can also outperform their competition. This dynamic drives earnings growth, stock price appreciation, and above average employment growth, Ados explained.
Furthermore, entrepreneurial behavior can translate into shareholder value. ERShares research asserts that entrepreneurially run companies achieve higher long-run growth rates. Those companies emphasize motivated and transparent leadership and prioritize shareholders. They also focus on sustainable organic growth and operational efficiency.
“Entrepreneurs have economic and non-economic incentive to create wealth for themselves and all other stakeholders. They hold a long-term vision that far exceeds typical leaders of major corporations,” Ados said.
Expanding on the proprietary Entrepreneur Factor, Ados contended that the right leader can make a huge difference.
“Our model identifies the right entrepreneurial company that invests in the right technology for a better and sustainable future,” Ados said.
Entrepreneurs tend to have actual missions and visions behind their companies. These are companies that try to make people’s lives better, we see it with Healthcare companies, we see it with technology companies, with clean energy companies. These companies are created by entrepreneurs who identified pain points in their personal lives and tried to come up with solutions. So, the key here is that they are driven not just by economics but mainly by their vision, mission, and passion. And they tend to build teams that have the same drivers and a determination to offer value regardless of personal sacrifices.
“At ERShares, we invest in entrepreneurial companies that meet the Entrepreneur Factor threshold,” Ados said. “The proprietary Entrepreneur Factor (EF) has been developed and statistically verified through a complex; data-intensive analysis available through a professional application on Bloomberg terminals.”
Shulman argued that future trends led by entrepreneurial companies help change people’s lives and the world as a whole, pointing to long-term strategies that shape the future in areas like digitalization across industries, internet of everything, precision medicine & diagnosis, workplace equity & economic empowerment, growth in emerging economies, and decentralization & international cooperation in business.
As a way to capture this growth strategy, investors can look to the ERShares Entrepreneurs ETF (ENTR). The ERShares NextGen Entrepreneurs ETF (ERSX) also captures entrepreneurship of the international variant.
The ETFs’ indexing methodology incorporates the ERShares proprietary Entrepreneur Factor, which delivers strong performance across a variety of investment strategies, without disrupting investors’ underlying risk profile metrics.
The ERShares methodology also looks for characteristics like organizational dynamics, global perspective, integrated trusted leaders, visionary leadership, disruptive entrepreneurial mindsets, and innovative implementations.
ERShares follows a bottom-up investment orientation, powered by artificial intelligence, that stands above other investment factors such as momentum, sector, growth, value, leverage, market cap (size), and geographic orientation. With the aid of AI and thematic research, ERShares incorporates a macro-economic, top-down approach that integrates changing investment flows, innovation entry points, sector growth, and other characteristics into a dynamic, global perspective model.
Financial advisors who are interested in learning more about the entrepreneur factor can watch the webcast here on demand.