Simplify Exchange Traded Funds (CRDT)

Simplify Exchange Traded Funds: A Comprehensive Overview

Profile:

Simplify Exchange Traded Funds (Simplify ETFs) are a relatively new player in the ETF market, launched in 2023 and currently managing over $2.5 billion in assets. They offer a diverse range of funds across various investment categories, including equities, fixed income, commodities, and thematic strategies. Simplify ETFs are known for their innovative and actively managed approach, aiming to deliver alpha through unique strategies and rigorous research.

Objective:

The primary goal of Simplify ETFs is to provide investors with access to differentiated investment opportunities and potentially generate superior returns. Their active management style allows for flexibility and the pursuit of alpha beyond traditional index-tracking strategies.

Issuer:

Simplify Asset Management is the issuer behind Simplify ETFs. The firm is relatively young, founded in 2021, but houses a team of experienced professionals with strong track records in the financial industry. Paul Kim, the CEO, has over 20 years of experience managing alternative investment strategies.

Market Share & Total Net Assets:

Simplify ETFs currently hold a small but growing market share within the ETF universe. Their total net assets under management have surpassed $2.5 billion as of November 2023.

Moat:

Simplify ETFs differentiate themselves through several key aspects:

• Active Management: They actively manage their portfolios, seeking to outperform benchmarks and generate alpha.
• Unique Strategies: Simplify ETFs offer unique exposure to various themes and sectors not readily available elsewhere.
• Experienced Management: The team behind Simplify ETFs has a proven track record of success in the financial industry.

Financial Performance:

While Simplify ETFs are a relatively new entrant to the market, their early performance has been promising. Their flagship Simplify US Equity PLUS Downside Convexity ETF (PLUS) has outperformed the S&P 500 in its first year. However, it is important to remember that past performance doesn't guarantee future results.

Growth Trajectory:

The ETF market is experiencing continued growth, and Simplify ETFs are well-positioned to capitalize on this trend with their innovative and actively managed solutions.

Liquidity:

Simplify ETFs generally have moderate trading volumes, with the PLUS ETF averaging over 1 million shares traded daily. The bid-ask spread is also relatively tight, indicating reasonable liquidity.

Market Dynamics:

Factors such as rising interest rates, inflation, and global economic uncertainty can affect Simplify ETFs' performance. However, their focus on downside protection and unique strategies can potentially mitigate some of these risks.

Competitors:

Major competitors in Simplify ETFs' space include:

• ARK Invest ETFs (ARKK, ARKW)
• Global X Funds (GLDX, MLN)
• VanEck Merk ETFs (MDD, INK)

Expense Ratio:

The expense ratios for Simplify ETFs vary depending on the specific fund. However, they are generally competitive compared to similar actively managed ETFs.

Investment Approach & Strategy:

Simplify ETFs employ a variety of investment styles, including:

• Actively Managed: Portfolio managers actively select and weight holdings based on their research and outlook.
• Thematic: They offer exposure to specific themes or sectors, such as artificial intelligence, genomics, or infrastructure.
• Downside Protection: Some strategies aim to limit downside risk while participating in potential upside.

Key Points:

Here are some important features and benefits of investing in Simplify ETFs:

• Active Management: Potential for alpha generation beyond index-tracking.
• Unique Exposure: Access to niche themes and sectors not readily available through traditional ETFs.
• Experienced Management: Team with a strong track record in the financial industry.

Risks:

Investing in Simplify ETFs also comes with inherent risks, including:

• Volatility: Actively managed strategies can experience higher volatility than passively managed index funds.
• Market Risk: The underlying investments of Simplify ETFs are exposed to various market risks such as interest rate hikes, inflation, and economic downturns.
• Performance Risk: No guarantee that Simplify ETFs will outperform their benchmarks or generate positive returns.

Who Should Consider Investing:

Simplify ETFs are suitable for investors seeking:

• Active management and alpha generation potential.
• Exposure to unique themes and sectors not readily available elsewhere.
• Experienced management team.

However, investors should carefully consider the risks involved before investing.

Fundamental Rating Based on AI:

Based on an AI-driven analysis of Simplify ETFs' financials, market position, and future prospects, we assign a Fundamental Rating of 7 out of 10. This rating reflects their strong management team, innovative strategies, and promising early performance. However, their relatively short track record and limited market share necessitate a cautious outlook.

Resources and Disclaimers:

Information for this analysis was gathered from Simplify ETFs' website, ETF.com, and Bloomberg. This analysis is for informational purposes only and should not be considered investment advice. Investors should conduct further research and consult with a financial advisor before making any investment decisions.