Small-cap companies often fly under the radar for investors, overshadowed by their larger counterparts. Despite the elevated risks associated with small-cap stocks, a sagacious approach to investing can unravel their potential for remarkable returns.
This is precisely the mission embraced by Infrastructure Capital Advisors with its InfraCap Small Cap Income ETF (SCAP). By venturing into a spectrum of small-cap entities, the fund seeks “above-average yield” and aims for robust total returns through a blend of capital appreciation and current income.
A Dynamic Strategy
Thriving in the realm of small-cap investing demands unwavering diligence and ongoing analysis to outpace the competition. Infracap adopts a dynamic strategy, intertwining quantitative and qualitative assessments to make informed investment decisions and potentially exceed the performance of passive index funds.
Tax Advantages Amplifying Appeal
Individual traders navigating their way through the labyrinth of small-cap investments often encounter a plethora of tax challenges. Conversely, the unique structure of SCAP facilitates an “in-kind” mechanism for redemptions, circumventing capital gains realization and bestowing a tax-efficient edge.
Evaluating Performance Amidst Market Flux
Past performance serves as a guiding beacon rather than an authoritative oracle for future returns. Nevertheless, exploring SCAP’s historical trajectory alongside its passive counterparts unveils a promising narrative. SCAP has surged by 4.68% in 2024, overshadowing the Russell 2000 Index growth of 3.13% and the iShares Morningstar Small-Cap ETF (ISCB) increment of 2.09%.
Diving into the Portfolio Mix
SCAP’s portfolio boasts 69 holdings, a more focused approach relative to its passive peers. Within this mosaic, the ten leading holdings compose approximately 38.2% of the fund.
The current top five holdings in SCAP are as follows:
- iShares Russell 2000 ETF (IWM) – Magnifying 14.20% of the fund – This ETF contemporaneously mirrors the Russell 2000 Index movements.
- MKS Instruments Inc (MKSI) – Representing 3.13% of the fund – MKS serves as a pivotal technology provider supporting semiconductor manufacturing.
- Chord Energy Corp (CHRD) – Encompassing 2.96% of the fund – Chord spearheads energy exploration in the Williston Basin of North Dakota and Montana.
- GoDaddy Inc (GDDY) – Constituting 2.94% of the fund – GoDaddy pioneers the tech realm with domain registry and web hosting services.
- Herc Holdings Inc (HRI) – Seizing 2.88% of the fund – Herc anchors the construction and industrial equipment rental domain.
Featured photo by Markus Winkler on Unsplash.