Simplify Asset Management announced today that it is launching its newest ETF, the Simplify Managed Futures Strategy ETF (NYSE Arca: CTA).
CTA seeks long-term capital appreciation by providing investors with a systematic long/short managed futures strategy, investing across U.S. and Canadian commodities and rates while excluding equity futures 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 commodity trading advisor Altis Partners.
“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,” said David Berns, chief investment officer and co-founder of Simplify. “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.”
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 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,” added Michael Green, portfolio manager and chief strategist with Simplify.
CTA is the latest addition to Simplify’s growing line-up of ETFs, which also includes the Simplify Aggregate Bond PLUS Credit Hedge ETF (AGGH ), the Simplify High Yield PLUS Credit Hedge ETF (CDX ), the Simplify Volatility Premium ETF (SVOL ), the Simplify Interest Rate Hedge ETF (PFIX ), and the Simplify US Equity PLUS Downside Convexity ETF (SPD ).
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