Harbor Active Small Cap ETF (SMLL) Covered Calls

The Harbor Active Small Cap ETF is an actively managed fund targeting long-term capital appreciation through a diversified portfolio of U.S. small-cap stocks. Utilizing a proprietary bottom-up selection process, the fund identifies companies with strong cash flows and competitive advantages. SMLL seeks to outperform the Russell 2000 Index by leveraging professional stock selection to navigate the inefficiencies and volatility inherent in the small-cap equity market.

You can sell covered calls on Harbor Active Small Cap ETF to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for SMLL (prices last updated Wed 10:15 AM ET):

Want to make money with covered calls?  Sign Up For A Free Trial

Core Business and Products

The Harbor Active Small Cap ETF (SMLL) is an actively managed fund designed to provide exposure to the U.S. small-cap blend market. The fund is sub-advised by specialized portfolio managers who select approximately 40 to 80 stocks from the broader small-cap universe. Its investment objective is to achieve long-term total return by identifying "under-followed" or "mispriced" companies that demonstrate robust earnings growth and superior return on equity (ROE).

Because the fund is actively managed, it does not strictly follow a market-cap-weighted index. Instead, the management team conducts bottom-up fundamental research to build a concentrated portfolio of high-conviction ideas. The selection process emphasizes metrics such as Price to Free Cash Flow and Return on Invested Capital. This active approach allows the fund to pivot its sector weightings quickly in response to changing economic conditions, such as the domestic reshoring and AI-integration trends of 2026.

Competitive Landscape

The small-cap segment is notoriously inefficient, which provides opportunities for active managers to add value. SMLL competes primarily with large, passive small-cap ETFs and other factor-based "smart beta" funds. While passive funds offer lower expense ratios, SMLL positions itself as a higher-alpha alternative for investors willing to pay a premium for professional stock selection and risk management.

Key related investment vehicles and competitors in the small-cap space include:

1. iShares Russell 2000 ETF: The primary passive benchmark for small-cap equities and the most liquid competitor in the space.
2. iShares Core S&P Small-Cap ETF: A major competitor that uses a passive approach but includes a quality screen (positive earnings) for index eligibility.
3. Vanguard Small-Cap ETF: A broad market-cap-weighted fund that provides low-cost exposure to the small-cap segment.
4. Avantis U.S. Small Cap Value ETF: A popular actively managed peer that focuses specifically on small-cap value and profitability factors.

Strategic Outlook and Innovation

In 2026, as the small-cap market experiences a renaissance driven by lower interest rates and a broadening of corporate earnings, SMLL is strategically focused on "quality growth." The fund’s managers emphasize companies with pricing power and the ability to maintain margins despite inflationary pressures. By avoiding "zombie" companies—highly leveraged small-caps that struggle to service debt—the fund aims to provide a more resilient return profile than broad index trackers.

Innovation for SMLL is centered on its active management framework, which integrates proprietary quantitative screens with deep fundamental analysis. This hybrid approach allows the fund to identify companies early in their growth cycle before they are fully recognized by larger institutional investors. As market leadership shifts away from mega-cap tech and toward a more diversified set of winners, the active flexibility of SMLL is designed to capture the "next generation" of market leaders in the small-cap arena.

Want more examples? SMLF Covered Calls | SMLV Covered Calls