Simplify Asset Management has launched a new ETF in the US providing exposure to a managed futures strategy that goes long and short across US Treasury, commodity, and currency markets.
The ETF seeks absolute returns by going long and short across US Treasury, commodity, and currency futures contracts.
The Simplify Managed Futures Strategy ETF (CTA US) has been listed on NYSE Arca with an expense ratio of 0.75%.
The fund aims to deliver positive returns regardless of the market environment. It may be used to enhance diversification, especially for traditional equity-centric portfolios, and protect against risk-off events.
The ETF is actively managed and sub-advised by Altis Partners, a commodity trading advisor with more than 20 years of experience.
Altis deploys a proprietary suite of four systematic models based on price trend, mean reversion, carry, and risk-off factors when allocating across various futures contracts.
The strategy may go long futures in order to profit from rising markets, go short in anticipation of falling prices, or take a more conservative approach with a spread that combines long and short positions.
Investors will not be required to deal with the cumbersome K-1 tax form as the ETF is structured as a traditional open-ended fund with a Cayman Islands subsidiary that is allowed to hold up to 25% of the fund’s total assets in futures contracts.
David Berns, co-Founder and CIO at Simplify Asset Management, said: “With interest rates near all-time lows and equity valuations growing ever more stretched, investors are searching for sources of absolute return that can simultaneously serve as a portfolio diversifier. Managed futures have long been put forward as just such a potential solution but investors have too often been underwhelmed by typical managed futures strategies’ correlation to equities. That is something we’ve worked to solve with CTA and we’re very pleased to be adding this fund to our growing lineup of innovative ETF solutions.”
There are a number of managed futures ETFs available in the US. The largest is the $150m WisdomTree Managed Futures Strategy Fund (WTMF US) which seeks to capture rising and falling price trends in the commodity, currency, equity, and rates markets by actively managing long and short positions in futures contracts. The fund comes with an expense ratio of 0.65%.