Simplify US Equity PLUS Downside Convexity ETF (SPD)

Overview

The Simplify US Equity PLUS Downside Convexity ETF (SPYC) seeks to provide exposure to US equities while also offering downside protection through a strategy that includes options. It aims to participate in equity market gains while mitigating losses during market declines.

Reputation and Reliability

Simplify Asset Management is a relatively new ETF issuer focused on innovative and complex investment strategies, their reputation is still developing.

Management Expertise

Simplify Asset Management has a team of experienced professionals with expertise in options trading and portfolio management.

Goal

The primary investment goal of SPYC is to provide capital appreciation with a focus on downside protection using an options overlay strategy.

Investment Approach and Strategy

Strategy: SPYC does not track a specific index, it employs an active strategy that combines equity exposure with the purchase of put options and the sale of call options to create a convexity profile.

Composition SPYC primarily holds US equities and a portfolio of options (puts and calls).

Market Share: SPYC's market share within the downside protection ETF segment is moderate but growing as it gains traction.

Total Net Assets (AUM): 84411296

Key Competitors

• ProShares S&P 500 Bond ETF (SPXB)
• AGFiQ US Market Neutral Anti-Beta Fund (BTAL)
• FT Cboe Vest U.S. Equity Deep Buffer ETF - July (JULB)
• FT Cboe Vest U.S. Equity Moderate Buffer ETF - July (XJUL)

Competitive Landscape

The competitive landscape includes ETFs that provide either downside protection through bond exposure or other equity-based strategies that reduce beta. SPYC distinguishes itself with its options-based convexity strategy. SPYC's advantages lie in its potential for equity market participation and downside mitigation, while a disadvantage might be the complexity and cost associated with options.

Historical Performance: Historical performance data needs to be sourced from financial data providers.

Benchmark Comparison: Performance should be compared to a benchmark representing US equities (e.g., S&P 500) and a downside protection strategy index.

Expense Ratio: 0.5

Average Trading Volume

The average trading volume for SPYC is moderate and should be checked with current market data.

Bid-Ask Spread

The bid-ask spread for SPYC is typically small, reflecting its liquidity, but real-time data should be consulted.

Market Environment Factors

SPYC is affected by overall equity market performance, volatility levels (VIX), and interest rate movements, influencing the cost and effectiveness of its options strategy.

Growth Trajectory

SPYC's growth is dependent on investor demand for downside protection, especially during periods of market uncertainty or heightened volatility. Its strategy and holdings can evolve as market conditions change.

Competitive Edge

SPYC's competitive edge lies in its unique options-based convexity strategy, which offers a different risk-return profile compared to traditional equity or bond ETFs. This strategy aims to provide equity upside participation while mitigating downside risk, appealing to investors seeking a balanced approach. Simplify's expertise in constructing and managing options strategies is a key differentiator. The ETF's focus on providing convexity can be attractive during volatile market conditions.

Volatility

SPYC's volatility is expected to be lower than the broad equity market due to its downside protection strategy, but can still be impacted by market swings and options premium changes.

Market Risk

SPYC is exposed to market risk from its equity holdings and risks associated with options trading, including changes in volatility, interest rates, and the potential for options to expire worthless.

Ideal Investor Profile

The ideal investor for SPYC is one seeking capital appreciation with a focus on downside protection. This includes investors who are moderately risk-averse, looking for a way to stay invested in equities while mitigating potential losses during market downturns.

Market Risk

SPYC is more suitable for long-term investors or those with a medium-term outlook who want to balance equity exposure with downside risk management. It's less suited for active traders due to the complexities of the options strategy.

SPYC offers a unique blend of equity exposure and downside protection through a sophisticated options strategy. It aims to participate in equity market gains while mitigating losses during market declines, making it appealing to risk-conscious investors. While its expense ratio is relatively high, the potential benefits of downside convexity may outweigh the costs for some investors. Its performance is influenced by market volatility, options pricing, and the overall direction of the equity market.

• SPXB
• BTAL
• JULB
• XJUL
• IVOL
• SVIX

Data Sources:

• Simplify Asset Management Website
• ETF.com
• Morningstar
• Bloomberg

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Consult with a qualified financial advisor before making any investment decisions.