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2 ETFs That Focus On Investing In Entrepreneurs And Founder-Led Businesses

Published 11/18/2021, 05:08 AM
CHKP
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NVDA
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SEDG
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TTD
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3697
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ERSX
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FVRR
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AFTPY
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QS
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ABNB
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DASH
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BOSS
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RBLX
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Entrepreneurship is instrumental for economic development. The Organisation for Economic Co-operation and Development (OECD) highlights:

“Entrepreneurship is a key driver of growth. Entrepreneurs bring new business models and technologies to market, provide competition to established firms.”

The global startup economy is worth close to $4 trillion. Not every new venture is successful. In fact, recent statistics put the rate of failure within the first several years at between 75% and 90%. And running out of cash or failing to raise capital is usually the most important reason.

According to the US Bureau of Labor Statistics:

“Survival rates for establishments vary by industry. The healthcare and social assistance industry, for example, consistently ranks among the industries with the highest survival rates over time, while construction ranks among the lowest.”

Yet, many new ventures are successful and list on various stock exchanges worldwide. We previously discussed a number of exchange-traded funds (ETFs) that focus on businesses that have recently gone public (here, here and here).

Today, we introduce two thematic ETFs that focus on entrepreneurship. However, we should note that both funds are small and, thus, require further research before investors should hit the ‘buy’ button.

1. Global X Founder-Run Companies ETF

  • Current Price: $37.18
  • 52-Week Range: $27.64 - $38.00
  • Dividend Yield: 1.79%
  • Expense Ratio: 0.45%

The Global X Founder-Run Companies ETF (NYSE:BOSS) provides access to mid- and large-capitalization US firms where a founder currently serves as the CEO. The fund was first listed in February 2017.

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BOSS Weekly Chart.

BOSS, which has 99 holdings, tracks the returns of the Solactive US Founder-Run Companies Index. The leading sectors are information technology (33.3%), financials (14.8%), communication services (12.4%), health care (11.9%) and real estate (10.6%).

Trade Desk (NASDAQ:TTD), which offers a digital advertising platform; online gaming and entertainment platform Roblox (NYSE:RBLX); Quantumscape (NYSE:QS), which is developing battery technologies for electric vehicles; Airbnb (NASDAQ:ABNB), whose platform connects hosts and guests globally; logistics platform DoorDash (NYSE:DASH); and chip giant NVIDIA (NASDAQ:NVDA) are among the leading stocks on the roster. The top 10 names comprise around 12.5% of net assets of $16.2 million.

Over the past 12 months, the ETF is up more than 33.5% and year-to-date it returned 24.6%. BOSS hit a record high in recent days.

Trailing P/E and P/B ratios are 35.15x and 4.94x, respectively. Given how far the fund has appreciated in recent months, some profit-taking is likely. Interested readers would find better value around $35.

2. ERShares Non US Small Cap ETF

  • Current Price: $24.18
  • 52-Week Range: $20.59 - $29.44
  • Dividend Yield: 0.47%
  • Expense Ratio: 0.75%

The ERShares Non US Small Cap (NYSE:ERSX) uses an artificial intelligence-based proprietary Entrepreneur Factor® criteria and invests in entrepreneurial, mostly non-US small-cap businesses. The fund started trading in December 2018.

ERSX Weekly Chart.

ERSX currently has 55 stocks. The top 10 make up more than 30% of net assets of $42.4 million. In terms of sectors, we see IT (32.93%), consumer discretionary (19.16%), communication services (15.81%), health care (10.35%), industrials (7.76%) and real estate (5.40%).

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Among the leading holdings are the Israel-based SolarEdge Technologies (NASDAQ:SEDG), which is becoming a leading name in the alternative energy space, and Fiverr International (NYSE:FVRR), whose platform connects freelancers with businesses; pure-play cybersecurity vendor Check Point Software Technologies (NASDAQ:CHKP); Japanese software group Shift (T:3697); and Australian financial technology group Afterpay (OTC:AFTPY).

ERSX is up close to 5% this year and more than 17% in the past year. After hitting an all-time high in February, the ETF has come under pressure. Those investors who would like to access non-US firms that meet the fund sponsor’s proprietary entrepreneurship criteria should keep it on their radar.

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sounds great 👍, thanks for the article 🌹
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