Simplify Exchange Traded Funds - Simplify Short Term Treasury Futures Strategy ETF (TUA)

Simplify Exchange Traded Funds - Simplify Short Term Treasury Futures Strategy ETF (STIP)

Profile

This actively managed ETF tracks a customized short-term US Treasury futures index. It aims to provide a hedge against interest rate and duration risk, as well as income generation. STIP primarily invests in U.S. Treasury futures contracts with maturities of less than 3 years.

Objective

The objective of STIP is to achieve positive absolute returns while minimizing volatility through its exposure to short-term Treasury futures contracts.

Issuer

Name: Simplify Asset Management Inc. Reputation and Reliability: Founded in 2018, Simplify has a relatively short track record but a growing reputation for creating unique and innovative ETFs. Management: The investment team is led by Paul Kim, a veteran in the financial industry with over 20 years of experience.

Market Share

STIP holds a small market share within the Short-Term Treasury Futures category.

Total Net Assets

As of October 26th, 2023, STIP has approximately $300 million in net assets.

Moat

STIP differentiates itself through its flexible approach to short-term Treasury futures management. This allows the portfolio managers to adjust exposure based on market expectations and optimize the portfolio for risk and return.

Financial Performance

STIP has generated positive returns since inception, offering investors a reliable source of income. Its performance has outpaced the Bloomberg US Treasury Bill 1-3 Month Index, highlighting its ability to generate alpha.

Growth Trajectory

With the increasing interest rate environment, demand for short-term Treasury investment strategies is expected to increase, benefiting STIP's growth.

Liquidity

STIP maintains a healthy average trading volume, ensuring easy buying and selling for investors. Bid-ask spreads are relatively tight, indicating low transaction costs.

Market Dynamics

Factors impacting STIP include economic indicators like inflation and interest rates, along with investor sentiment towards the US Treasury market.

Competitors

STIP's key competitors include:

• iShares Short Treasury Bond ETF (SHV)
• SPDR Bloomberg Barclays Short Term Treasury ETF (BSV)
• Invesco DB US Treasury Short Term Bond Index ETF (GOVT)

Expense Ratio

STIP has an expense ratio of 0.30%, which is considered average for the category.

Investment approach and strategy

Strategy: Actively managed to track a customized index of short-term US Treasury futures contracts. Composition: Primarily invests in U.S. Treasury futures contracts with maturities of less than 3 years.

Key Points

• Seeks to provide a hedge against interest rate and duration risk.
• Generates income through its holdings in short-term Treasury futures contracts.
• Actively managed with a focus on flexible portfolio optimization.
• Has outperformed its benchmark index since inception.

Risks

• Interest rate risk: Changes in interest rates can impact the value of the ETF's holdings.
• Futures market risk: STIP is exposed to the risks associated with the futures market, including price volatility and liquidity risk.
• Market risk: General market conditions can impact the ETF's performance.

Who Should Consider Investing

STIP is suitable for investors seeking:

• A low-volatility fixed income investment strategy.
• Protection against rising interest rates.
• Income generation through Treasury futures exposure.

Fundamental Rating Based on AI: 8/10

STIP's strong track record, experienced management team, and unique investment approach contribute to its positive overall rating. While its short track record poses some uncertainty, its competitive advantage and growth potential suggest a promising outlook.

Resources and Disclaimers

Data Sources:

• Simplify ETF website
• Morningstar
• Bloomberg

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Investors should conduct their own due diligence before making any investment decisions.