Investors looking to tap into theme of entrepreneurship can approach that in various forms, but one of the best strategies to consider is the the Entrepreneur 30 Fund (NYSEArca: ENTR).
The Entrepreneur 30 Fund tries to reflect the performance of the Entrepreneur 30 Index, which is comprised of 30 U.S. companies with the highest market capitalizations and composite scores based on six criteria, referred to as entrepreneurial standards.
One reason ENTR is relevant is the similarities between equity investing and starting, a concept the exchange traded fund brings to life.
“Stock Investing involves analysis of business models, products, markets, customers and management of existing companies before you make an investment decision. This is similar to the analysis required when one plans to start her own company to give shape to her business idea,” notes Dr. Vijay Malik.
ENTR’s Resilience: A Thorough Methodology?
Interestingly, ENTR is a factor-based strategy. But rather than focusing on value or size or other traditional factors, the fund’s methodology goes deeper.
The factors screened include management, which requires set factors such as the turnover among the top five executives within a company as compared to other companies in the broader universe must be met.
The compensation screen covers annual compensation, salary, bonus, stock options and other compensation criteria be met for a company to be included, including, among other things, that the executive compensation among the top five executives of a company relative to comparable executives in similar companies in the broader universe must be met for the company to be included.
“Stock Investing can be compared to entrepreneurship only when you look at stocks as pieces of business ownership and not as trading instruments whose prices fluctuate all the time,” notes Malik.
Within ENTR, company statistics refers to a company meeting predetermined criteria regarding the corporate structure, and other company statistics, such as a company must have certain set characteristics within its corporate structure as compared to other companies.
Due to its indexing methodology, the fund has higher concentration in consumer discretionary, information technology and healthcare.
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.