Simplify Asset Management has introduced an actively managed municipal bond ETF that seeks to further boost its yield through a multi-asset options-writing overlay.
David Berns, CIO of Simplify Asset Management.
The Simplify National Muni Bond ETF (NMB US) has been listed on NYSE Arca with an expense ratio of 0.52%.
Sub-advised by Foundation Credit, an institutional credit investment firm, the fund aims to deliver attractive tax-free income through municipal bond coupons while simultaneously generating taxable gains by opportunistically trading undervalued municipal securities.
The ETF’s prospectus notes that the fund will invest primarily in investment-grade securities and is not bound by any set duration parameters.
Additionally, NMB incorporates a risk-managed, income-generating options-selling strategy that involves selling call or put option spreads across a variety of instruments, including equity, fixed income, and commodity indices, and ETFs.
David Berns, CIO of Simplify Asset Management, commented: “Rather than simply allowing muni investors to clip coupons, NMB is built to combine three sources of potential return: the yields from the muni bonds themselves, opportunistic investments in securities overlooked by the traditional passive indices, and the income generated by the option-writing strategy. It’s a capital-efficient means for investors to stack a number of different return sources without requiring additional investment outlay.
“This combination of taxable and tax-free income sources can result in after-tax yields that far exceed those of national municipal bond indices. NMB is a powerful new tool for investors and we’re very pleased to be bringing it to market.”
NMB is the latest addition to Simplify’s line-up of fixed income solutions, headlined by the $1.2 billion Simplify MBS ETF (MTBA US) and the $630 million Simplify Short Term Treasury Futures Strategy ETF (TUA US). MTBA provides exposure to residential and commercial mortgage-backed securities, while TUA offers a tool for managing interest rate risk by investing in short-term US Treasury futures.