ETF Trends CEO Tom Lydon discussed the Entrepreneur 30 Fund (ENTR) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
ENTR selects the most entrepreneurial, primarily US Large Cap companies, that meet the thresholds embedded in their proprietary Entrepreneur Factor (EF).
There has been a thematic approach to investing in entrepreneurs. Investors can tap into the entrepreneurship economy with a targeted strategy to enhance an investment portfolio with quickly rising companies.
So, what is an entrepreneurial company, and how is it different from others? Entrepreneurial companies are led by a main founder. From decades together, founder-run Entrepreneurial companies have shaped the economy by investing in their people and innovation leading to exceptional growth. Many Entrepreneurial companies are run by Founder-CEOs.
Their presence is reflected in the company’s performance, and having the right Founder-CEO can make an important difference. The differential between the period with the Founder-CEO still in the company and the period without the founder is approximately 7% in excess return. Entrepreneurs typically provide the difference between success and failure and wealth creation versus wealth destruction. Disruptive Innovation moves at a rapid pace, and only the most capable leaders survive.
The ERShares’ Entrepreneur Factor
The fund delivers strong performance across various investment strategies without disrupting investors’ underlying risk profile metrics. The investment process is powered by the latest artificial intelligence technology. Investors can leverage AI technology for asset screening, portfolio building, and ongoing operations.
ERShares incorporates 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. Additionally, ERShares backs the companies with the best entrepreneurial minds that invest in the right technology for a sustainable and better future.
The ERShares methodology also looks for characteristics like organizational dynamics, global perspective, integrated trusted leaders, visionary leadership, disruptive entrepreneurial mindsets, and innovative implementations. They invest in organizations that emphasize entrepreneurial culture, organic growth, and aligned compensation. Investing in companies based on our core fundamental characteristics will provide the foundation to build a high conviction portfolio with the potential for alpha generation and upside capture.
ENTR also includes several screens to weed out undesirable companies. The factors screened include management, which requires set factors regarding a company’s management, such as the turnover among the top five executives within a company compared to other companies in the broader universe. A profitability screen requires a company to meet predetermined criteria regarding net income over a static threshold to be included, including the company’s net income compared to predetermined benchmarks that must be met for the company to be included.
A company statistics screen is also included – a company meeting predetermined criteria regarding the corporate structure. Finally, the revenue screen requires a company to meet predetermined criteria regarding revenue over a static threshold to be included, including, among other things, the amount and growth of revenue of a company as compared to predetermined benchmarks must.