Simplify launches managed futures ETF

ETF issuer Simplify Asset Management has launched the Simplify Managed Futures Strategy ETF (NYSE Arca: CTA).

The firm writes that CTA seeks long-term capital appreciation by providing investors with a systematic long/short managed futures strategy, investing across US and Canadian commodities and rates while excluding equity futures in order to ensure low correlations with equity-dominated portfolios. 

The fund will allocate across four underlying models, each with a distinct area of focus including ‘price trend,’ ‘mean reversion,’ ‘carry’ and ‘risk-off,’ developed and managed by Altis Partners, a commodity trading advisor with more than 20 years of experience.

“With interest rates near all-time lows and equity valuations growing ever more stretched, investors are searching for sources of absolute return that can simultaneously serve as a portfolio diversifier. Managed futures have long been put forward as just such a potential solution, but investors have too often been underwhelmed by typical managed futures strategies’ correlation to equities. That is something we’ve worked to solve with CTA and we’re very pleased to be adding this fund to our growing lineup of innovative ETF solutions,” says David Berns, Chief Investment Officer and Co-Founder with Simplify.

Simplify points to two key portfolio use cases for CTA. First, given the diversified nature of the holdings and the underlying systematic models, the fund seeks to generate consistent positive returns, regardless of the specific market environment at the time. Second, with its focus on low correlation with the broad equity market and downside risk management in risk-off events, CTA can serve as a powerful diversifier within equity-centric portfolios.

“With its low correlation to equities, systematic commodity and rate exposure, and the fact that CTA will not saddle investors with a K-1, we see this new fund as a cornerstone in building one’s overall portfolio,” says Michael Green, CFA, Portfolio Manager and Chief Strategist with Simplify.

Published on March 10, 2022

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