Simplify Asset Management, a New York-based specialist in options-based investing, has launched a multi-asset ETF designed to help investors navigate current tough asset allocation decisions.
According to Simplify, the classic balanced portfolio may have challenging years ahead.
The Simplify Macro Strategy ETF (FIG US) has been listed on NYSE Arca with an expense ratio of 0.75%.
According to Simplify, with strong potential headwinds to bonds, stretched equity valuations, continued inflationary pressures, and increasingly fragile market structure, the classic balanced portfolio may have challenging years ahead.
FIG seeks to address these concerns by creating a risk-balanced portfolio comprised of US equities with positive convexity, managed futures that are diversifying and inflation-sensitive, and a suite of income sources with low sensitivity to duration.
According to FIG’s prospectus document, exposure to each asset class is obtained via investing in Simplify’s existing suite of ETFs.
Within that suite, Simply offers a range of options-enhanced equity ETFs, including funds targeting the S&P 500 and Nasdaq 100, which utilize combinations of equity futures, put options, and call options to create core stock market exposures with positive convexity – the exposure is hedged on the downside while maintaining significant upside potential.
The Simplify Managed Futures Strategy ETF, meanwhile, goes long and short across US Treasury, commodity, and currency markets. The fund’s addition to FIG’s portfolio seeks to enhance diversification in lieu of bonds while simultaneously boosting inflation protection.
Finally, the Simplify High Yield PLUS Credit Hedge ETF seeks to maximize current income by investing primarily in high-yield bonds while mitigating credit risk, while the Simplify Volatility Premium ETF also focuses on delivering income through a short volatility strategy while managing tail risk.
In addition to the above allocations, FIG may also opportunistically invest up to 20% of its assets in derivatives on equities, credit, interest rates, and currency pairs to capitalize on perceived idiosyncratic macro dislocations.
Michael Green, Portfolio Manager and Chief Strategist at Simplify Asset Management, said: “We are very pleased to add this fund to our growing lineup, building on our history of launching innovative ETFs that help reduce market volatility and improve investors’ ability to stay the course.
“With equities and fixed income both experiencing a period of negative returns due to the prevailing market environment, investors are eager to find ways that will help them hedge their downside risk, provide uncorrelated returns, and generate income. We believe the traditional 60/40 portfolio no longer provides the protection and diversification that it has in the past, so we are excited to offer an easily accessible solution to the allocation problem.”