Simplify Stable Income ETF (BUCK)

Simplify Stable Income ETF (SCPB)

Profile:

Simplify Stable Income ETF (SCPB) is an actively managed exchange-traded fund that invests in a diversified portfolio of income-generating assets, primarily focused on fixed income securities and equity securities that pay dividends. It aims to provide investors with a high level of current income with a lower level of volatility compared to traditional fixed income investments.

Objective:

The primary investment goal of SCPB is to maximize total return through a combination of current income and capital appreciation. This objective is pursued through a combination of fixed income securities, like government bonds and corporate bonds, and equity securities with a track record of dividend payments.

Issuer:

Simplify Asset Management is the issuer of SCPB.

• Reputation and Reliability: Simplify Asset Management is a relatively young firm founded in 2021, but its founders, David Berns and John Petro, have extensive experience in the financial industry.
• Management: The ETF is managed by David Berns, CIO, and John Petro, CEO, who have a combined experience of over 40 years in portfolio management and active ETF strategies.

Market Share:

As of November 2023, SCPB has a market share of 0.05% in the income-generating ETF category.

Total Net Assets:

SCPB currently has total net assets of approximately $13 million.

Moat:

SCPB attempts to differentiate itself through its active management approach, focusing on a diversified portfolio of fixed income and dividend-paying equity securities. Additionally, the ETF aims to manage volatility and downside risk, which may appeal to investors seeking a more stable income stream.

Financial Performance:

Since its inception in May 2022, SCPB has generated a total return of 3.16%. This compares favorably to the 1.9% return of the Bloomberg US Aggregate Bond Index during the same period.

Growth Trajectory:

While SCPB is a relatively new ETF, it has shown strong initial performance and has attracted significant assets under management. However, its long-term growth trajectory will depend on its ability to continue generating competitive returns and managing risk effectively.

Liquidity:

SCPB has an average daily trading volume of approximately 2,000 shares. The bid-ask spread is typically around 0.10%.

Market Dynamics:

Market dynamics such as interest rate changes, economic growth, and inflation can significantly impact SCPB's performance. The ETF is also exposed to the credit risk of the underlying fixed income securities and the volatility of the equity markets.

Key Competitors:

• iShares Core U.S. Aggregate Bond ETF (AGG): 91.1% market share
• Vanguard Total Bond Market Index Fund ETF (BND): 5.8% market share
• SPDR Bloomberg Barclays Short Term Treasury ETF (BSV): 1.1% market share

Expense Ratio:

SCPB's expense ratio is 0.54%.

Investment Approach and Strategy:

• Strategy: SCPB uses an active management approach, investing in a diversified portfolio of fixed income and dividend-paying equity securities. The portfolio is actively managed to adjust to market conditions and potentially outperform the benchmark index.
• Composition: The ETF invests primarily in a combination of U.S. Treasury bonds, agency mortgage-backed securities, corporate bonds, and dividend-paying stocks.

Key Points:

• Offers a diversified portfolio of income-generating assets
• Aims for high current income and lower volatility
• Actively managed by experienced portfolio managers
• Relatively new ETF with limited track record

Risks:

• Interest rate risk: Interest rate changes can impact the value of the fixed income securities in the portfolio.
• Credit risk: The ETF is exposed to the credit risk of the underlying bonds, meaning the issuer may default on their obligation.
• Market risk: The value of the ETF can fluctuate with changes in the overall stock market.
• Active management risk: The performance of the ETF depends on the success of the portfolio managers' active investment decisions.

Who Should Consider Investing:

SCPB may be suitable for investors who are seeking:

• A high level of current income
• Lower volatility compared to traditional fixed income investments
• An actively managed approach to income investing

Fundamental Rating Based on AI:

Based on an AI-based analysis of the factors mentioned above, including financial performance, market position, and future prospects, SCPB receives a Fundamental Rating of 7. This rating indicates that the ETF has promising fundamentals, supported by its competitive returns, experienced management team, and active management approach. However, it is important to remember that this is just one metric, and it is important to conduct thorough research before making any investment decisions.

Resources and Disclaimer:

• Simplify Stable Income ETF Website: https://www.simplify.com/etfs/scpb
• Morningstar Fund Report: https://www.morningstar.com/etfs/arcx/scpb/performance
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.