In an investing environment where income is again popular but volatility is still a constant companion, Simplify Asset Management is taking a measured gamble: that small-cap stocks, if carefully chosen and handled with surgical precision-like surgery—can provide both growth opportunities and stable income. The company has partnered with Piper Sandler to introduce the Simplify Piper Sandler US Small-Cap PLUS Income ETF (NYSE:LITL), an actively managed fund that not only surfs the small-cap wave but attempts to drive it.
LITL is constructed for investors looking for a sophisticated way to get small-cap exposure—one that screens for quality, responds to the business cycle, and provides an added dimension of monthly income generation through a proprietary options overlay.
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The fund begins by narrowing down approximately 2,000 U.S. small-cap stocks, eliminating the most illiquid and volatile. Piper Sandler then brings a macroeconomic perspective to bear in informing stock selection. The company’s factor-based approach focuses on 3–4 indicators—like value, revisions to earnings, or stability in sales—that are well-received in today’s economic climate. These stocks are ranked based on these indicators, and this yields a portfolio of about 200 names, half the size of the market, half-weighted and re-allocated only when the macro environment necessitates it.
What distinguishes LITL is its dual mandate. In addition to capital appreciation, the fund seeks to provide monthly income through a risk-managed options strategy. Rather than limiting upside with covered calls, LITL sells put spreads on a variety of instruments—from equity indices to commodities—to generate extra yield while trying to maintain equity gains.
Simplify’s CIO and co-founder, David Berns, explained that small-cap stocks can have periods of high growth but have always been more economically cyclical than big-cap stocks. Piper Sandler’s special economic overlay tries to add value by choosing the stocks most likely to thrive in today’s environment, while delivering investors current income.
The fund has an expense ratio of 0.91%, reflective of its active management and options overlay—a bit pricier than passive small-cap funds, but consistent with sophisticated strategy peers.
With small caps often overlooked in conservative markets, LITL is a contrarian bet: that strategic stock selection, guided by macro insight and supported by a steady income engine, can bring a stronger—and more rewarding—dimension to small-cap investing.
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