Simplify launches ‘Opportunistic Income’ ETF

Jul 4th, 2023 | By | Category: Fixed Income

Simplify Asset Management has launched a new actively managed ETF that delivers an income-focused, opportunistic credit strategy.

David Berns, co-Founder and Chief Investment Officer at Simplify Asset Management

David Berns, co-Founder and Chief Investment Officer at Simplify Asset Management.

The Simplify Opportunistic Income ETF (CRDT US) has been listed on NYSE Arca, coming to market with initial assets of approximately $40 million.

The fund comes with an expense ratio of 0.50%.

Sub-advised by Asterozoa Capital Management, an alternative manager specializing in credit and fixed income derivatives, the ETF seeks income with a secondary objective of capital appreciation by selecting securities within the investment-grade, high yield, and distressed debt universes.

Treasuries, corporate bonds, and preferred stock are all eligible for inclusion. The fund may invest up to 25% of its assets in securities issued in countries other than the US including up to 10% in emerging markets. The strategy is relatively unconstrained in terms of duration and quality, only limiting its allocation to distressed debt to 15%.

Asterozoa’s security selection process harnesses macroeconomic, quantitative, and fundamental research. Additionally, the firm utilizes a dynamic macro hedging overlay, typically in the forms of interest rate swaps, US Treasury futures, and credit default swaps, to help mitigate drawdowns related to interest rate and credit sensitivities.

David Berns, co-Founder and Chief Investment Officer at Simplify Asset Management, commented: “The ongoing volatility in the fixed income universe presents a host of challenges to investors and advisors as they seek to build and maintain the income generating component of their respective portfolios. Proven, active management can play a major role in not only identifying opportunities for income and growth but also minimizing risks and correlations which can emerge with little to no warning and have a hugely destructive impact on an unhedged, passive bond portfolio.

“We are very excited to be launching CRDT into the current market as this is a means for all investors to add a true hedge fund-like strategy powered by active security selection but with no K-1s, lockups, or high fees which are so often associated with this kind of approach. The search for income never ends, and with CRDT, we believe we’re providing a significant upgrade for investors seeking effective current income solutions.”

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