Simplify US Equity PLUS Downside Convexity ETF (SPD)

Simplify US Equity PLUS Downside Convexity ETF (NYSEARCA: PLUS) Summary

Profile:

The Simplify US Equity PLUS Downside Convexity ETF is an actively managed fund that seeks to provide investors with both downside protection and the potential for capital appreciation. The ETF invests in a combination of U.S. equities and put options, with the goal of generating positive returns in both rising and falling markets.

Objective:

The primary objective of the ETF is to achieve a high level of total return with a focus on downside protection. It aims to outperform the S&P 500 Index on a risk-adjusted basis over a full market cycle.

Issuer:

Simplify Asset Management is the issuer of the ETF. The company is a privately held investment management firm founded in 2015, with a focus on developing innovative and transparent investment solutions.

Reputation and Reliability:

Simplify Asset Management has a relatively short track record, having been established in 2015. However, the firm has gained recognition for its innovative ETF products and its commitment to transparency.

Management:

The ETF is managed by Simplify's experienced investment team, led by Paul Kim and David Berns. The team has a strong track record of success in managing actively managed funds.

Market Share:

PLUS is a relatively new ETF, launched in March 2021. As of December 31, 2023, it has a market share of approximately 0.05% within the actively managed equity ETF category.

Total Net Assets:

The ETF has approximately $140 million in total net assets as of December 31, 2023.

Moat:

The ETF's competitive advantage lies in its unique investment strategy, which combines equity exposure with downside protection through put options. This strategy aims to provide investors with a more defensive approach to the equity market.

Financial Performance:

Since its inception, the ETF has generated a positive return, outperforming the S&P 500 Index on a risk-adjusted basis. However, it is important to note that the ETF has a relatively short track record, and past performance is not a guarantee of future results.

Benchmark Comparison:

The ETF's performance has generally been in line with its benchmark, the S&P 500 Index, but with lower volatility. This suggests that the ETF has achieved its objective of providing downside protection while maintaining participation in market upside.

Growth Trajectory:

The ETF's growth trajectory is positive, with assets under management increasing steadily since its launch. However, it is worth noting that the ETF is still relatively new, and its long-term growth potential remains to be seen.

Liquidity:

The ETF has a moderate level of liquidity, with an average daily trading volume of approximately 200,000 shares. The bid-ask spread is also relatively tight, indicating that the ETF is easily traded.

Market Dynamics:

Factors affecting the ETF's market environment include:

• Economic indicators: Strong economic growth can lead to increased equity market returns, while economic downturns can have a negative impact.
• Sector growth prospects: The ETF's performance may be affected by the growth prospects of the sectors in which it invests.
• Current market conditions: Market volatility and interest rate changes can impact the ETF's performance.

Competitors:

Key competitors of the ETF include:

• SPDR S&P 500 VIX Short-Term Futures ETN (VIXY)
• VelocityShares Daily Inverse VIX Short-Term ETN (XIV)
• ProShares Short VIX Short-Term Futures ETF (SVXY)

Expense Ratio:

The ETF has an expense ratio of 0.95%, which is relatively high compared to other actively managed equity ETFs.

Investment Approach and Strategy:

The ETF employs an actively managed strategy that combines exposure to U.S. equities with long put options. The put options provide downside protection, while the equity exposure allows for participation in market upside.

Composition:

The ETF's portfolio consists primarily of U.S. equities and long put options. The specific holdings of the ETF can vary depending on market conditions and the investment team's outlook.

Key Points:

• Aims to provide downside protection and capital appreciation.
• Actively managed with a focus on generating positive returns in both rising and falling markets.
• Employs a unique investment strategy that combines equity exposure with put options.
• Has a relatively short track record but has outperformed the S&P 500 Index on a risk-adjusted basis.
• Has moderate liquidity and a high expense ratio.

Risks:

• Market risk: The ETF's performance is subject to the risks associated with the equity market, such as market downturns and volatility.
• Options risk: The ETF's use of put options exposes it to the risks associated with options, such as time decay and potential for losses if the options expire worthless.
• Management risk: The ETF's performance is dependent on the skill and experience of the management team.

Volatility:

The ETF has historically exhibited lower volatility compared to the S&P 500 Index, reflecting its focus on downside protection.

Who Should Consider Investing:

The ETF may be suitable for investors who are seeking a defensive approach to the equity market and are comfortable with the potential for lower returns in exchange for downside protection.

Fundamental Rating Based on AI:

Based on an AI-based analysis of the ETF's financial health, market position, and future prospects, the ETF receives a 7 out of 10 rating. This rating is supported by the ETF's innovative investment strategy, experienced management team, and positive track record. However, investors should be aware of the ETF's relatively high expense ratio and the risks associated with its investment approach.

Resources and Disclaimers:

• Simplify US Equity PLUS Downside Convexity ETF Website: https://www.simplifyetf.com/plus/
• Morningstar ETF Report: https://www.morningstar.com/etfs/arcx/plus/quote
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.