NEW YORK--(BUSINESS WIRE)--Simplify Asset Management (“Simplify”), an innovative provider of options-based Exchange Traded Funds (“ETFs”), today announced the launch of its newest ETF: the Simplify Tail Risk Strategy ETF (CYA).
CYA seeks to provide investors with a standalone solution for hedging against severe equity market selloffs. The fund deploys an advanced options overlay designed to handle multiple types of market dislocations and is structured in such a way that modest allocations to the fund may provide a total portfolio hedging solution.
“Bond yields remain near all-time lows, driving more investors into equities to find growth and income. But with so much uncertainty in the markets, it can be extremely challenging for investors and advisors to stay the course in equity-dominated portfolios. That is where CYA comes in,” said Paul Kim, CEO with Simplify. “We’ve designed the fund in such a way that a modest exposure can potentially provide a meaningful hedge against significant drawdowns, those tail risks that can have such a negative impact on a portfolio and the fear of which can push investors into making portfolio allocation missteps.”
CYA invests between 10 and 15% annually in a sophisticated options strategy that is designed to create a highly convex payoff when markets are down significantly. The remainder of the fund is invested in high income strategies to help fund the option purchases.
“The larger the market moves to the downside, the larger the potential benefits from the CYA approach may be,” added Kim. “That’s why our options overlay is referred to as ‘convex,’ as there is a strong distinction between this approach and more linear equity hedging strategies.”
CYA joins a Simplify ETF family that in just over one year, has already grown to approximately $700 million, as advisors, family offices, institutions and the retail investor community have been drawn to the more scientific approach the firm has pioneered in combining equity index exposures with robust options overlays. More recently, the firm has also introduced a number of innovative ETF solutions designed around interest rate hedging (PFIX), volatility income (SVOL) and equity plus bitcoin exposure, via GBTC (SPBC).
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.
An investment in the fund involves risk including the possible loss of principal.
The fund seeks to provide income and capital appreciation while protecting against significant downside risk. The fund is new and has a limited operating history.
The Fund invests in ETFs (Exchange-Traded Funds) and is therefore subject to the same risks as the underlying securities in which the ETF invests as well as entails higher expenses than if invested into the underlying ETF directly.
The Fund is subject to the risk that the investment management strategy may not produce the intended results and may negatively impact Fund performance. The adviser’s overlay strategy will not fully protect the Fund from declines in the market.
Fund risks include and are not limited to: credit default swaps -involves investment techniques and risks different from those associated with ordinary portfolio security transactions, such as potentially heightened counterparty, concentration and exposure risks, geopolitical risk -the occurrence of global events similar to those in recent years may result in market volatility and may have long term effects on both the U.S. and global financial markets, and real estate risks may change in response to changes in the real estate market such as declines in the value of real estate, lack of available capital or financing opportunities, and increases in property taxes or operating costs.
While the option overlay is intended to improve the Fund’s performance, there is no guarantee that it will do so. Utilizing an option overlay strategy involves the risk that as the buyer of a put or call option, the Fund risks losing the entire premium invested in the option if the Fund does not exercise the option. Also, securities and options traded in over-the-counter markets may trade less frequently and in limited volumes and thus exhibit more volatility and liquidity risk.
Futures Contract Risk: Futures contracts involve the following risks (a) the imperfect correlation between the change in market value of the instruments held by the Fund and the price of the forward or futures contract; (b) possible lack of a liquid secondary market; (c) leverage, which means a small percentage of assets in futures can have a disproportionately large impact on the Fund and the Fund can lose more than the principal amount invested; (d) losses are potentially unlimited; (f) the possibility that the counterparty will default in the performance of its obligations.
Simplify ETFs are distributed by Foreside Financial Services, LLC.