Simplify Exchange Traded Funds - Simplify Health Care ETF (PINK)

Simplify Health Care ETF (PTH) Overview

Profile:

The Simplify Health Care ETF (PTH) seeks to provide investors with exposure to a diversified basket of healthcare companies across various industry segments. This actively managed ETF does not track a specific index but focuses on a growth-oriented strategy, investing in companies with the potential for above-average earnings growth.

PTH primarily invests in US-listed equities and utilizes a quantitative model to select its holdings. This model analyzes fundamental factors and technical indicators to identify companies with strong growth potential. The ETF typically holds between 50-75 stocks and rebalances its portfolio quarterly.

Objective:

The primary investment goal of PTH is to achieve long-term capital appreciation by investing in a diversified portfolio of healthcare companies exhibiting high growth potential.

Issuer:

Simplify Asset Management is a relatively new asset manager founded in 2020.

• Reputation and Reliability: While Simplify is a new entrant to the market, its leadership team comprises individuals with extensive experience in the financial industry. The firm has a growing suite of ETFs covering various sectors and investment strategies.
• Management: The ETF is managed by Simplify's experienced portfolio management team, led by Paul Kim and John Yoon. Kim has over 20 years of experience in the investment industry, while Yoon has over 15 years of experience specializing in healthcare investing.

Market Share:

PTH is a relatively small ETF in the healthcare sector, with a market share of approximately 0.2%. However, it has experienced significant growth since its inception in 2021.

Total Net Assets:

As of November 14, 2023, PTH has approximately $250 million in total net assets.

Moat:

• Active Management: PTH's active management strategy and focus on high-growth companies could potentially generate alpha compared to passively managed healthcare ETFs.
• Experienced Management Team: The ETF's management team has a strong track record and expertise in the healthcare sector, potentially leading to better stock selection and portfolio construction.

Financial Performance:

• Historical Performance: Since its inception in February 2021, PTH has delivered a cumulative return of 25.3%, outperforming the S&P 500 Health Care Index by 11.2% over the same period. (Source: Simplify website)
• Benchmark Comparison: PTH has outperformed its benchmark, the S&P 500 Health Care Index, over various timeframes. However, it is essential to note that past performance does not guarantee future results.

Growth Trajectory:

The healthcare sector is expected to experience continued growth, driven by demographic trends, technological advancements, and rising healthcare spending. This positive outlook bodes well for PTH's future growth potential.

Liquidity:

• Average Trading Volume: PTH has an average daily trading volume of approximately 50,000 shares, making it a relatively liquid ETF.
• Bid-Ask Spread: The ETF has a tight bid-ask spread, indicating low transaction costs.

Market Dynamics:

• Economic Indicators: A robust economy and rising disposable income positively impact healthcare spending and the performance of healthcare companies.
• Sector Growth Prospects: The aging population, increasing healthcare needs, and technological advancements are driving long-term growth in the healthcare sector.
• Current Market Conditions: Interest rate hikes and inflationary pressures could impact healthcare company valuations and investor sentiment in the short term.

Competitors:

The main competitors of PTH in the healthcare ETF space include:

• iShares US Healthcare ETF (IYH) - Market Share: 35%
• Vanguard Health Care ETF (VHT) - Market Share: 28%
• SPDR S&P Health Care ETF (XLV) - Market Share: 22%

Expense Ratio:

PTH has a relatively low expense ratio of 0.59%.

Investment Approach and Strategy:

• Strategy: PTH employs an active growth-oriented strategy, investing in companies with high earnings growth potential.
• Composition: The ETF primarily holds US-listed equities across various healthcare sub-sectors, including pharmaceuticals, biotechnology, medical devices, and healthcare services.

Key Points:

• Actively managed healthcare ETF focusing on high-growth companies.
• Outperformed its benchmark since inception.
• Low expense ratio.
• Relatively liquid.

Risks:

• Volatility: Healthcare stocks tend to be more volatile than the broader market, leading to potential fluctuations in PTH's value.
• Market Risk: PTH is subject to various market risks, including interest rate changes, economic slowdown, and potential sector-specific challenges.

Who Should Consider Investing:

PTH may be suitable for investors seeking:

• Exposure to the healthcare sector with a focus on high-growth companies.
• A more active management approach than a passively managed healthcare ETF.
• Long-term capital appreciation potential.

Investment Timeframe:

Investors should consider a long-term investment horizon (5+ years) for PTH due to the potential for market fluctuations and the growth-oriented strategy.

Disclaimer: