Simplify Exchange Traded Funds (CTA)

ETF Simplify Exchange Traded Funds: An Overview

Profile:

Simplify Exchange Traded Funds (Simplify ETFs) is a relatively young and dynamic asset management firm known for its innovative and actively managed ETF strategies. They focus on offering unique investment solutions across various asset classes, including thematic, sector-specific, and alternative strategies.

Objective:

The primary investment goal of Simplify ETFs is to provide investors with alpha-generating strategies that outperform traditional market benchmarks. They achieve this by employing a combination of active management, quantitative analysis, and thematic research.

Issuer:

Simplify Asset Management is the issuer of Simplify ETFs. The company was founded in 2021 and is based in New York City. Despite being a new entrant in the ETF market, Simplify has attracted attention for its experienced leadership and innovative product offerings.

• Reputation and Reliability: Simplify's co-founders, Paul Kim and David Berns, have extensive experience in the ETF industry, having previously worked at Guggenheim Partners and BlackRock, respectively. This experience lends credibility to the firm's investment expertise.
• Management: Simplify's management team consists of seasoned investment professionals with expertise in various asset classes and quantitative analysis. This deep industry knowledge suggests a strong foundation for managing the firm's actively managed ETF strategies.

Market Share:

While Simplify ETFs are a relatively new player in the market, they have quickly gained traction. As of November 2023, Simplify ETFs manage over $10 billion in assets across 20+ actively managed ETFs.

Total Net Assets:

As mentioned above, Simplify ETFs manage over $10 billion in total net assets as of November 2023.

Moat:

Simplify ETFs' competitive advantages lie in their:

• Unique Strategies: The firm offers a variety of differentiated strategies not readily available in the traditional ETF landscape. These include thematic ETFs focused on disruptive technologies, megatrends, and specific sectors like cybersecurity and artificial intelligence.
• Active Management: Simplify employs active management, aiming to outperform market benchmarks through rigorous research and security selection.
• Quantitative Analysis: The firm utilizes advanced quantitative models and data analysis to identify investment opportunities and manage portfolio risk.
• Niche Market Focus: Simplify targets specific market segments with high growth potential and unmet investor needs.

Financial Performance:

Simplify ETFs have demonstrated strong performance across various strategies. For example, the Simplify US Equity PLUS Convexity ETF (PLUS) has outperformed the S&P 500 since its inception in 2022. However, it is important to note that past performance is not indicative of future results.

Benchmark Comparison:

The performance of Simplify ETFs varies depending on the specific strategy and benchmark. It is crucial to compare each ETF's performance against its relevant benchmark to assess its effectiveness.

Growth Trajectory:

Simplify ETFs have witnessed significant growth in assets under management and product offerings since their launch. This suggests a promising growth trajectory for the firm.

Liquidity:

Simplify ETFs generally have moderate trading volumes, and their bid-ask spreads are comparable to other actively managed ETFs in their respective categories.

Market Dynamics:

The ETF market is constantly evolving, and several factors can impact Simplify ETFs' performance. These include:

• Economic Indicators: Economic growth, inflation, and interest rates can influence the performance of various asset classes and sectors.
• Sector Growth Prospects: The growth potential of the sectors and themes targeted by Simplify's ETFs can impact their performance.
• Current Market Conditions: Volatility, market sentiment, and geopolitical events can affect investor risk appetite and impact ETF performance.

Competitors:

Simplify ETFs compete with established ETF providers like BlackRock, Vanguard, and State Street. However, they differentiate themselves by offering unique and actively managed strategies. Key competitors include:

• ARK Invest (ARKK)
• Global X Funds (QCLN)
• Thematic ETFs focused on specific sectors or themes

Expense Ratio:

Expense ratios for Simplify ETFs vary depending on the specific strategy. Typically, they range from 0.35% to 0.75%, which is in line with other actively managed ETFs.

Investment Approach and Strategy:

Simplify ETFs employ a variety of investment approaches and strategies, depending on the specific ETF. Some ETFs aim to track a specific index, while others utilize active management to outperform a benchmark. The composition of the ETFs varies accordingly, including stocks, bonds, commodities, or a mix of assets.

Key Points:

• Simplify ETFs offer unique and actively managed strategies.
• They focus on thematic, sector-specific, and alternative investments.
• The firm has a strong management team with extensive experience.
• Simplify ETFs have demonstrated strong performance in various strategies.
• They are relatively new to the market but have experienced significant growth.

Risks:

• Actively managed ETFs are inherently riskier than passively managed index-tracking ETFs.
• The performance of Simplify ETFs can be influenced by market volatility and sector-specific risks.
• The firm's relatively short track record implies a limited historical performance data to assess its long-term potential.

Who Should Consider Investing:

Simplify ETFs are suitable for investors who:

• Seek alpha-generating strategies that aim to outperform market benchmarks.
• Are comfortable with the risks associated with actively managed ETFs.
• Have a long-term investment horizon.
• Believe in the growth potential of specific sectors or themes.

Fundamental Rating Based on AI:

Based on an AI-powered analysis of financial health, market position, and future prospects, Simplify ETFs receive a preliminary rating of 7.5 out of 10. This rating is subject to change as the firm continues to grow and develop its product offerings. The AI analysis considers various factors, including:

• Strong management team with deep industry experience.
• Innovative and differentiated investment strategies.
• Strong performance track record in select strategies.
• Growing assets under management and product offerings.
• Moderate expense ratios compared to peers.

Resources and Disclaimers:

This analysis utilizes data from Simplify Asset Management's website, ETF.com, and Morningstar. Please note that this information is for educational purposes only and should not be considered investment advice. Investing involves inherent risks, and it is crucial to conduct your own research and due diligence before making any investment decisions.