The Small-Cap Income Fund That Pays You Monthly (7% Dividend Yield)
This ETF turns the messiest corner of the market into a 7%+ monthly paycheck
For a decade, owning small-caps has felt like a punishment.
The S&P 500 ran.
The Nasdaq-100 ran harder. And the Russell 2000 just sat there, dragging behind while everyone who bought it wondered why they bothered.
I get it. I avoided small-caps for years for the exact same reason.
The Russell 2000 Index is a stock market index that measures the performance of 2,000 "small-cap" (smaller) publicly traded U.S. companies. It serves as the standard benchmark for investors tracking how smaller, domestically-focused American businesses are performing.
👉 My portfolio is up more than 37% YTD, compared to US Stocks being up 11.4%.
But something changed recently, and it has very little to do with the small-cap index suddenly waking up. It has everything to do with a newer fund that takes that ugly, underperforming basket of 2,000 companies and squeezes a monthly income stream out of it using daily covered calls. The result is a payout yielding north of 7%, and a chunk of it lands in your account in a way the IRS does not even treat as income.
Double-Edged Sword
Here is the uncomfortable truth about small-cap investing.
The index is full of companies that will never amount to much. Many of them have thin earnings histories, inconsistent cash flows, and a single catalyst holding the whole story together. When that catalyst slips, the stock craters. There are a few thousand names in this universe and only a small handful of them ever deliver the kind of returns that make small-cap investing worth the volatility.
So when you buy a plain Russell 2000 index fund, you are buying the winners AND the long tail of dead weight that drags the whole thing down. That is exactly why traditional small-cap ETFs have lagged the large-cap indices for so long. Just look at how the Russell 2000 Index VTWO 0.00%↑ has underperformed SPY 0.00%↑ and QQQ 0.00%↑ over the last decade.
The companies winning right now are the ones plugged into the AI buildout in some capacity. Power infrastructure, networking, specialized hardware, mining the materials that feed it all. But picking those individual names is its own full-time job, and most people reading this do not have hundreds of hours to dig through balance sheets.
However, the caveat is that small-cap companies is where you can get those multi-baggers! For instance, we initiated a buy alert on Bloom Energy BE 0.00%↑, which has now risen by nearly 268% in about 6 months.
This is the problem the fund I want to show you was built to solve. You collect income from the entire basket, the underperformers included, while still holding the real shares of the names that are actually working.
👉 Upgrade Your Subscription - $0.82 per day to become a better investor. Paid subs get buy alerts first.
How The Income Actually Gets Generated
The fund holds the underlying small-cap stocks directly. Then it writes covered call options against that portfolio every single day. Those daily options generate premium, and that premium is what funds your monthly distribution.
When volatility is high, those premiums fatten up. The fund collects more, and it has more cash to pass along to you. The daily frequency also means management can adjust the approach constantly instead of getting locked into a 30-day position and praying the market cooperates.
There is a real tradeoff to writing options, and I am going to walk through it honestly below, including how the fund behaved during the last serious selloff and the one structural feature that genuinely surprised me when I dug into the latest filings.
Meet The Fund
The ticker is…
