Fund is fully invested in the S&P 500 with simultaneous exposure to a series of put-spread collars designed to help reduce volatility
Simplify Asset Management (“Simplify”), an innovative provider of options-based Exchange Traded Funds (“ETFs”), today announced the latest addition to its fast-growing ETF family: the Simplify Hedged Equity ETF (HEQT).
HEQT seeks capital appreciation by fully investing in a low-cost S&P 500 ETF while simultaneously investing in a series of put-spread collars designed to help reduce volatility. By deploying a ladder of collars that expire over three sequential months, the fund seeks to create a hedged equity approach with more robust opportunities for improving rebalancing luck. Each collar consists of an approximately 5% OTM to 20% Out of the Money (OTM) put-spread, funded by selling a call. HEQT is the first equity ETF to utilize this laddered approach to put-spread collars.
“Many investors struggle to stay the course with their equity investments due to volatility, but by creating a lower volatility equity exposure, those who are more risk averse can stay invested and improve their opportunities to participate in market upside,” said David Berns, Ph.D., CIO and Co-Founder with Simplify. “At the same time, with bond yields near all-time lows, investors are searching for alternatives to traditional low vol investments. The possibility of reduced volatility offered by HEQT creates a powerful alternative for investors, and we’re very pleased to be bringing this fund to market.”
HEQT is the latest addition to a Simplify ETF family that recently crossed the $825 million mark in assets, as of October 26th. Among the innovative and first-to-market ETF solutions designed and launched by Simplify in recent months include funds focused on interest rate hedging (PFIX), volatility income (SVOL) and equity plus bitcoin exposure, via GBTC (SPBC). Last month, Simplify also unveiled the Simplify Health Care ETF (PINK), an actively managed ETF focused on leading companies in biotech and healthcare which is also the first ETF committed to donating all of its net profits from managing the fund to Susan G. Komen®, the world’s leading breast cancer organization.
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 Hedged Equity ETF (the “Fund”) seeks to provide capital appreciation.
The fund is new and has a limited operating history.
The use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. These risks include (i) the risk that the counterparty to a derivative transaction may not fulfill its contractual obligations; (ii) risk of mispricing or improper valuation; and (iii) the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate, or index. Derivative prices are highly volatile and may fluctuate substantially during a short period of time. The use of leverage by the Fund, such as borrowing money to purchase securities or the use of options, will cause the Fund to incur additional expenses and magnify the Fund’s gains or losses. Futures may involve risks greater than the risks associated with investing directly in securities. Futures contracts may not correlate with the underlying investment or it could become mispriced or improperly valued and may not produce the desired investment results.
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.
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.
Out of the Money (OTM): Stands for out-of-the-money and represents how far the option strike is from current market price.
Put/Spread Collars: An options strategy that involves buying OTM put options while simultaneously selling the same number of puts further OTM (put-spread), while offsetting the cost of the put-spread by selling OTM calls (the collar).
Simplify ETFs are distributed by Foreside Financial Services, LLC.
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