Simplify Adds Downside Hedged ETFs

January 11, 2022

Simplify Asset Management is applying its downside hedge strategy to a trio of new ETFs.

The Simplify Emerging Markets Equity PLUS Downside Convexity ETF (EMGD), the Simplify US Small Cap PLUS Downside Convexity ETF (RTYD) and the Simplify Developed Ex-US PLUS Downside Convexity ETF (EAFD) launched on the NYSE Arca Tuesday.

All three will have expense ratios of 0.50% from the end of October onward, but carry varying fee waivers. Upon launch, EMGD will cost 0.36%, RTYD will cost 0.31% and EAFD will cost 0.32%.

These products are actively managed ETFs primarily holding other ETFs that invest 80% of holdings in their target market segment. The remaining 20% of assets are invested in put options against a different ETF in the same market segment, which would minimize losses or profits in the event of a turndown in that segment in exchange for lagging returns in the event of a quiet or bullish period.

Simplify currently holds $486.2 million in assets in two ETFs using this downside-tilted strategy, with the vast majority being held by the S&P 500-tracking Simplify US Equity PLUS Downside Convexity ETF (SPD). The Simplify Nasdaq 100 PLUS Downside Convexity ETF (QQD) has garnered just over $16 million since launching in December 2020.

Contact Dan Mika at [email protected], and follow him on Twitter

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