Simplify Announces Launch of The Simplify Managed Futures Strategy ETF (CTA)
New fund aims to provide investors with a systematic long/short managed futures strategy designed for absolute return and portfolio diversification; fund allocates across four underlying models designed by commodity trading veterans Altis Partners
March 08, 2022
CTA seeks long-term capital appreciation by providing investors with a systematic long/short managed futures strategy, investing across U.S. and Canadian commodities and rates while excluding equity futures in order to ensure low correlations with equity-dominated portfolios. The Fund will allocate across four underlying models, each with a distinct area of focus including ‘price trend,’ ‘mean reversion,’ ‘carry’ and ‘risk-off,’ developed and managed by Altis Partners, a commodity trading advisor with more than 20 years of experience.
“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,” said David Berns, PhD, Chief Investment Officer and Co-Founder with Simplify.
Simplify points to two key portfolio use cases for CTA. First, given the diversified nature of the holdings and the underlying systematic models, the fund seeks to generate consistent positive returns, regardless of the specific market environment at the time. Second, with its focus on low correlation with the broad equity market and downside risk management in risk-off events, CTA can serve as a powerful diversifier within equity-centric portfolios.
“With its low correlation to equities, systematic commodity and rate exposure, and the fact that CTA will not saddle investors with a K-1, we see this new fund as a cornerstone in building one’s overall portfolio,” added Michael Green, CFA, Portfolio Manager and Chief Strategist with Simplify.
CTA is the latest addition to Simplify’s growing lineup of innovative and highly differentiated ETFs, which also includes the recently launched Simplify Aggregate Bond PLUS Credit Hedge ETF (AGGH) and Simplify High Yield PLUS Credit Hedge ETF (CDX), the first ETFs that look to provide credit hedges to go along with exposures to investment grade bonds and high yield bonds, respectively; a way to monetize the premium in the VIX futures market via the Simplify Volatility Premium ETF (SVOL); rate-focused choices such as the Simplify Interest Rate Hedge ETF (PFIX); and numerous funds designed to help investors and advisors add the power of convexity to their portfolios, such as the Simplify US Equity PLUS Downside Convexity ETF (SPD), which currently has close to $500 million in asset under management.
ABOUT SIMPLIFY ASSET MANAGEMENT INC
Simplify Asset Management Inc. is a Registered Investment Adviser founded in 2020 to help advisors tackle the most pressing portfolio challenges with an innovative set of options-based strategies. By accounting for real-world investor needs and market behavior, along with the non-linear power of options, our strategies allow for the tailored portfolio outcomes for which clients are looking. For more information, visit www.simplify.us.