Small caps led 2026 on price
The Russell 2000 Index advanced up 19.25% year-to-date, while the S&P 500 Index is up 11.03% year-to-date (as of August 3, 2026).
Refinancing mechanics explain part of the pattern. Small-cap issuers refinance more frequently and borrow at floating rates more often than large-cap issuers, so a lower policy rate reaches small-cap income statements faster. The federal funds target range stood at 3.50 percent to 3.75 percent on July 29, 2026.[3]
Rate relief alone does not construct a portfolio. Cheaper debt strengthens a company that already earns its cost of capital and merely postpones a reckoning at a company that does not.
A dividend screen as a quality filter
A sustained cash dividend imposes a test that a projection cannot satisfy. Small-cap indices carry a meaningful share of companies with negative earnings, and a payout requirement removes much of that cohort without requiring any forecast.
The leverage profile of SCAP’s largest equity holdings reflects that filter. Net debt to EBITDA across the eight largest equity positions ranged from about 0.8 times at Toll Brothers to about 6.3 times at Herc Holdings, with a median near 2.7 times, measured on the most recent reported fiscal year for each company.[4] The equipment-rental position carries structurally higher leverage against a hard-asset fleet, while the homebuilders and the defense contractor sit below the median.
Interest coverage supports the same read. Halozyme covered interest expense more than 30 times and Huntington Ingalls more than nine times in their most recent reported fiscal years.[4]
Past performance is not indicative of future results. Fund holdings are subject to change at any time and should not be considered a recommendation to buy or sell any security. Click here for the fund’s Top Ten Holdings https://www.infracapfund.com/SCAP.
What the sleeve actually holds
SCAP managed roughly $20 million in net assets at a $37.99 net asset value in mid-July 2026 and reported a 30-day SEC yield of 4.10 percent.[5] The fund distributes monthly and has increased the monthly amount from $0.205 in late 2025 to $0.250 for the July 2026 declaration.[5][6]
Sector composition of the ten largest positions concentrates in industrials near 10.5 percent of net assets, in housing-linked and apparel consumer names near 9.9 percent, and in a money-market position near 4.5 percent.[5] Housing exposure ties the sleeve directly to the rate path, which cuts in both directions depending on how quickly mortgage rates follow policy.
The mandate combines dividend selection, growth-at-a-reasonable-price security analysis, selective covered-call writing against individual positions, and modest leverage in a 5 percent to 20 percent range.[5] Each element introduces a distinct risk. Leverage amplifies drawdowns, call writing caps upside on the specific names written, and a concentrated book raises the impact of any single position.
An income-oriented small-cap allocation therefore rests on two separate judgments. The first concerns whether small caps deserve capital in a cutting cycle. The second concerns which small caps can carry their debt if the cuts arrive later than the market expects.
Notes
1. Russell 2000 ETF and S&P 500 Index year-to-date performance as of August 3, 2026. The Russell 2000 is a stock market index that tracks small-cap U.S. companies, serving as a benchmark for smaller businesses and the domestic economy. It is run by FTSE Russell and covers the bottom two-thirds of the broader Russell 3000 Index. The S&P 500 is a stock market index that tracks 500 of the largest public companies in the United States. It covers about 80% of the total value of the U.S. stock market and serves as a main sign of how well the economy and market are doing.
2. WisdomTree U.S. SmallCap Dividend Fund, monthly closing prices through July 29, 2026.
3. Board of Governors of the Federal Reserve System, federal funds target range, upper and lower limits, retrieved via Federal Reserve Bank of St. Louis, FRED, July 29, 2026.
4. Company annual reports on Form 10-K, fiscal years ended during 2025 and early 2026, for the eight largest equity positions disclosed in SCAP holdings as of July 14, 2026.
5. SCAP fund fact sheet, fund data as of June 30, 2026, and holdings as of July 14, 2026.
6. Fund adviser, monthly distribution announcement, Substack, July 30, 2026.
About Us
Infrastructure Capital Advisors LLC is a SEC-registered investment adviser based in New York. The firm offers an ETF suite covering bond income, small-cap income, equity income, MLPs, preferred stock, and REIT preferreds. Funds: BNDS (Infrastructure Capital Bond Income ETF); SCAP (InfraCap Small Cap Income ETF); ICAP (InfraCap Equity Income Fund ETF); AMZA (InfraCap MLP ETF); PFFA (Virtus InfraCap U.S. Preferred Stock ETF); PFFR (InfraCap REIT Preferred ETF). For more information visit www.infracapfunds.com.
DISCLOSURE
This information is not an offer to sell, or solicitation of an offer to buy any investment product, security, or services offered by Jay Hatfield, or Infrastructure Capital Advisors, LLC, (”ICA”) or its affiliates. ICA, will only conduct such solicitation of an offer to buy any investment product or service offered by ICA, if at all, by (1) purported definitive documentation (which will include disclosures relating to investment objective, policies, risk factors, fees, tax implications and relevant qualifications), (2) to qualified participants, if applicable, and (3) only in those jurisdictions where permitted by law. Jay Hatfield or ICA may have a beneficial long or short position in securities discussed either through stock ownership, options, or other derivatives; nonetheless, under no circumstances does any article or interview represent a recommendation to buy or sell these securities. This discussion is intended to provide insight into stocks and the market for entertainment and information purposes only and is not a solicitation of any kind. ICA buys and sells securities on behalf of its fund investors and may do so, before and after any particular article herein is published, with respect to the securities discussed in any article posted. ICA’s appraisal of a company (price target) is only one factor that affects its decision whether to buy or sell shares in that company. Other factors might include, but are not limited to, the presence of mandatory limits on individual positions, decisions regarding portfolio exposures, and general market conditions and liquidity needs. As such, there may not always be consistency between the views expressed here and ICA’s trading or holdings on behalf of its fund investors. There may be conflicts between the content posted or discussed and the interests of ICA. Please reach out to the ICA for more information. Investors should make their own decisions regarding any investments mentioned, and their prospects based on such investors’ own review of publicly available information and should not rely on the information contained herein. ICA nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein. We have not sought, nor have we received, permission from any third-party to include their information in this article. Certain information contained in this document constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or other comparable terminology. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements.
This material must be preceded or accompanied by a prospectus. The information contained herein represents our subjective belief and opinions and should not be construed as investment, tax, legal, or financial advice. For a prospectus with this and other information about the Funds, please visit www.infracapfunds.com. Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. Please read the prospectus carefully before investing. For more information about the Funds, Fund strategies or Infrastructure Capital, please reach out to Craig Starr at 212-763-8336 (Craig.Starr@icmllc.com). The Funds are distributed either by Quasar Distributors, LLC or by VP Distributors, LLC, an affiliate of Virtus ETF Advisers, LLC. ICAP, SCAP, and BNDS ETFs are distributed by Quasar Distributors LLC. PFFA, PFFR, and AMZA ETFs are distributed by VP Distributors, LLC an affiliated of Virtus ETF Advisers, LLC.
Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. For a prospectus with this and other information about the Infrastructure Capital Small Cap Income ETF, please click here. Please read the prospectus carefully before investing. For more information about the Fund, Fund strategies or InfraCap, please reach out to Craig Starr at 212-763-8336 (Craig.Starr@icmllc.com).
A word about SCAP risk: Investing involves risk, including possible loss of principal. An investment in the Fund may be subject to risks which include, among others, investing in equities securities, dividend paying securities, utilities, small-, mid- and large-capitalization companies, real estate investment trusts, master limited partnerships, foreign investments and emerging, debt securities, depositary receipts, market events, operational, high portfolio turnover, trading issues, active management, fund shares trading, premium/discount risk and liquidity of fund shares, which may make these investments volatile in price. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund’s returns. Small and Medium-capitalization companies, foreign investments and high yielding equity and debt securities may be subject to elevated risks. The Fund is a recently organized investment company with no operating history. Please see prospectus for discussion of risks. Diversification cannot assure a profit or protect against loss in a down market. SCAP is distributed by Quasar Distributors, LLC.
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