Simplify Asset Management has added two new ETFs that aim to deliver enhanced income through an options strategy overlay.
Paul Kim, CEO and co-Founder of Simplify Asset Management.
The Simplify Stable Income ETF (BUCK US) and Simplify Enhanced Income ETF (HIGH US) have been listed on NYSE Arca with expense ratios of 0.36% and 0.51%, respectively.
BUCK, designed to serve as a cash alternative, invests in US Treasuries while maintaining an effective portfolio duration of one year or less.
The fund seeks to enhance its yield by layering an options writing strategy on top of the short-dated Treasuries portfolio in a risk-controlled manner.
The options sleeve consists of opportunistically selling short-dated put and call spreads on highly liquid global equity indices.
Option spreads typically involve simultaneously selling and buying call or put options on a reference asset so as to generate income from the net option premium while capping potential losses if the price of the reference asset moves significantly against the short option position.
Simplify employs its proprietary option-writing algorithm to dynamically select option type, underlier, and strikes in an attempt to generate attractive risk-adjusted returns.
HIGH, meanwhile, is designed as an alternative high yield solution for investors and advisors with a focus on delivering significant income with a low correlation to traditional credit and duration exposure. As with BUCK, HIGH is powered by Simplify’s proprietary options-writing algorithm.
Paul Kim, CEO and co-Founder of Simplify Asset Management, said: “We are very excited about today’s launch of BUCK and HIGH, two powerful new tools for investors and advisors in their search for yield. Traditional approaches to fixed income have been exposed this year as either under-delivering when it comes to generating income or being highly volatile in the midst of the market chaos that has marked so much of 2022.
“With BUCK and HIGH, there is an equal focus on income generation and risk management, providing what we believe will be appealing alternatives to cash and high yield bonds, respectively, with the opportunities for boosted yields while managing tail risk.”
Simplify’s line-up includes several first-of-their-kind yield- and fixed income-focused alternatives ETFs including the Simplify Interest Rate Hedge ETF (PFIX US), the Simplify Risk Parity Treasury ETF (TYA US), and the Simplify High Yield PLUS Credit Hedge ETF (CDX US).
Most recently, the firm launched the Simplify Bitcoin Strategy PLUS Income ETF (MAXI US) on Nasdaq in early October. MAXI, which comes with an expense ratio of 0.97%, is the world’s first ETF providing exposure to bitcoin futures while simultaneously delivering income through an options strategy overlay.