Simplify Asset Management Launches Simplify U.S. Equity Plus GBTC ETF (SPBC)
New fund is one of the first ETF to provide liquid, scalable means for adding Bitcoin exposure to a portfolio
May 25, 2021
SPBC will invest at least 80% of its net assets in U.S. equity securities, and expects to invest up to 15% of net assets in Bitcoin via the Grayscale Bitcoin Trust (GBTC). The portfolio is periodically rebalanced, and the fund’s Adviser actively manages the premium/discount dynamics of GBTC via either direct trading in the market or via private placement. The fund retains the tax efficiency that is a hallmark of the ETF space and does not provide investors with a K-1 come tax time.*
“Cryptocurrency markets now exceed $2 trillion in value and account for more than 1% of the overall global market portfolio. In addition, recent research has shown how uncorrelated crypto assets are to equity and fixed income markets, making them a possibly compelling part of a well-diversified portfolio,” said Paul Kim, CEO with Simplify. “But allocating to crypto assets is difficult since over-the-counter offerings can present a host of challenges for investors and advisors, managing direct crypto exposure can be incredibly time consuming and onerous, and there remains no ETF on the market providing direct exposure to crypto itself. We’re very pleased to be launching SPBC, as a means of solving these challenges, providing a liquid, scalable way to add Bitcoin exposure to a portfolio.”
SPBC joins a fast-growing Simplify ETF lineup, which earlier this month also saw the launch of the Simplify Interest Rate Hedge ETF (NYSE Arca: PFIX) and the Simplify Volatility Premium ETF (NYSE Arca: SVOL), two first-of-their-kind ETFs.
“Helping advisors and investors build better portfolios is at the heart of our work at Simplify, and with PFIX, SVOL, and now SPBC, we’re very excited about the approaches we’re bringing to market as a means of helping solve some of the toughest investment challenges,” added Kim.
“Nasdaq supports innovation throughout the financial universe, and our exchange is home to the most innovative companies and the most innovative ETFs,” said Giang Bui, Head of U.S. Exchange Trade Products for Nasdaq. “Our work with Simplify helps investors navigate the strong demand for cryptocurrency exposure and the regulatory requirements needed to protect investors.”
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.
Investors should carefully consider the investment objectives, risks, charges and expenses of Exchange Traded Funds (ETFs) before investing. To obtain an ETF's prospectus containing this and other important information, please call (855) 772-8488, or visit SimplifyETFs.com. Please read the prospectus carefully before you invest.
An investment in the fund involves risk, including possible loss of principal. Past performance does not guarantee future results.
The Simplify U.S. Equity PLUS GBTC ETF seeks long-term capital appreciation. The fund is new and has a limited operating history.
The Fund invests in companies without restriction as to capitalization. The earnings and prospects of small and medium-sized companies are more volatile than larger companies. Small and medium-sized companies normally have a lower-trading volumes which may tend to make their market price fall more in response to selling pressures and may have limited markets, product lines, or financial resources and lack management experience.
The Fund invests directly in equity securities of U.S. companies and also in exchange-traded futures contracts, Grayscale® Bitcoin Trust, a wholly-owned subsidiary and other exchange-traded funds and is therefore subject to the same risks as the underlying securities. The cost of investing in the Fund will be higher because you indirectly bear the expenses of the Subsidiary as well as entails higher expenses than if invested into the underlying ETF directly. The Subsidiary is a private fund not registered under the Investment Company Act of 1940 and is not subject to all of the investor protections of the 1940 Act, such as limits on leverage when viewed in isolation from the Fund. Futures contracts involve the risks of an imperfect correlation between the change in market value of the instruments held by the Fund and the price of the forward or futures contract; possible lack of a liquid secondary market; leverage, which means a small percentage of assets in futures can have a disproportionately large impact on the Fund and losses are potentially unlimited.
Risks Specific to Bitcoin and Cryptocurrency:
Bitcoins, Cryptocurrencies and pricing on Bitcoin Exchanges and other venues can be highly volatile.
The Fund will not invest “directly” in bitcoin, bitcoin futures, or other cryptocurrencies. The Fund is not expected to track the price movements of cryptocurrencies however the value of the Fund's investment in the Grayscale® Bitcoin Trust is subject to fluctuations in the value of bitcoins. The value of bitcoins is determined by the supply of and demand for bitcoins in the global market for the trading of bitcoins, which consists of transactions on electronic bitcoin exchanges. The shares of the Grayscale Bitcoin Trust may trade at a premium or discount, may not directly correspond to the price of Bitcoin, and are highly volatile.
Currently, there is relatively small use of bitcoins in the retail and commercial marketplace in comparison to the relatively large use of bitcoins by speculators, thus contributing to price volatility that could adversely affect the Fund's investment in the Grayscale® Bitcoin Trust. Bitcoin transactions are irrevocable so that stolen or incorrectly transferred bitcoins may be irretrievable. As a result, any incorrectly executed bitcoin transactions could adversely affect the value of the Fund's investment in the Grayscale® Bitcoin Trust.
Cryptocurrencies operate without central authority or banks and are not backed by any government. Cryptocurrencies may experience very high volatility, and related investment vehicles that invest in cryptocurrencies may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in the U.S. is still developing. Cryptocurrency exchanges have been known to stop operating and have permanently shut down due to fraud, technical glitches, hackers or malware. Cryptocurrencies exchanges are new, largely unregulated, and may be more exposed to fraud.
* In general, ETFs can be tax efficient. ETFs are subject to capital gains tax and taxation of dividend income. However, ETFs are structured in such a manner that taxes are minimized for the holder of the ETF and because the capital gains tax is incurred by the investor after the ETF is sold and is usually not exposed to capital gains on any individual security in the underlying portfolio. However, it is important to note that because the Subsidiary is a controlled foreign corporation, any income received by the Fund from its investments in the Subsidiary will be passed through to the Fund as ordinary income, which may be taxed at less favorable rates than capital gains. The Fund's investment in Grayscale Bitcoin Trust or similar investment vehicle is a grantor trust for U.S. federal income tax purposes, and therefore an investment by the Fund in such an investment will generally be treated as a direct investment in a cryptocurrency for such purposes.
Simplify ETFs are distributed by Foreside Financial Services, LLC.