Small Cap Stocks and the SCAP ETF: Navigating Tariff Turbulence
TL;DR
Investors may benefit from the SCAP ETF as it offers a potential rebound opportunity amidst small-cap underperformance.
SCAP ETF selects financially viable small-cap entities based on positive earnings, cash flow, dividend payments, and attractive valuations to enhance yield.
SCAP ETF provides a platform for contrarian investors to support small-cap companies, fostering growth and employment opportunities in the U.S. economy.
SCAP ETF utilizes active stock selection and option-writing strategies to navigate market volatility, offering investors a unique and dynamic investment approach.
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The equities market faced significant turbulence following President Donald Trump's Liberation Day initiative, a series of sweeping new tariffs announced in early April 2025. The Dow Jones Industrial Average plummeted 1,178 points, a 2.7% loss, with small-capitalization companies particularly affected. Historically, small businesses are a key backbone of the U.S. economy, driving growth and employment. However, in the current market recovery, small caps have underperformed their larger counterparts, with the iShares Russell 2000 ETF showing a year-to-date loss of more than 8%.
Analyst Michael Gayed, CFA, explains that small companies are more negatively impacted by tariffs due to their lesser ability to shift supply chains quickly and lack of financial resources to handle higher costs. This has led to a preference for large, multinational firms among market participants. However, the recent agreement between the U.S. and China to de-escalate their trade war by cutting tariffs has opened the door for a potential shift in market leadership, making small caps, and specifically the SCAP ETF, a relevant consideration for forward-looking investors.
The SCAP ETF, an actively managed fund by Infrastructure Capital Advisors, has demonstrated resilience, gaining nearly 5% in the trailing month and outperforming the Russell 2000 index. Its success is attributed to a rigorous stock selection process focusing on financial viability, consistent dividend payments, and attractive valuation metrics. Additionally, SCAP employs option-writing strategies to enhance yield, a tactic also used by Infrastructure Capital's Virtus InfraCap U.S. Preferred Stock ETF (PFFA).
Managed by Wall Street veteran Jay D. Hatfield, SCAP offers contrarian investors a disciplined approach to navigating the small cap space, particularly in an uncertain market. With signs of policy reversal and improving trade dynamics, the SCAP ETF presents a compelling opportunity for those looking to capitalize on a potential small cap rebound.
Curated from NewMediaWire
