On Tuesday, Simplify Asset Management bolstered its fund roster with the release of the Simplify Downside Interest Rate Hedge Strategy ETF. (RFIX ).
RFIX looks to offer a defensive hedge against higher rate movements while profiting from drops in long-term interest rates. The fund is actively managed and has a net expense ratio of 0.50%.
The lion’s share of RFIX’s holdings lie in over-the-counter (OTC) interest rate options. These options generally have a long-term timeline between five to seven years. This strategy is built to provide resonating convex exposure to the downward movement of interest rates.
This convex exposure and longer time horizon can help the fund better blunt the impact of declining treasury yields. Due to the use of OTC derivatives, Simplify notes that the fund serves a similar function to that of long-dated call options for U.S. Treasury bonds.
To build up income for its investors, RFIX invests in U.S. Treasury Securities and U.S. Treasury Inflation-Protected Securities (TIPS). Additionally, the fund may invest in other ETFs that primarily have a focus on investment-grade bonds, U.S. Treasuries, and TIPS. Debt securities that RFIX purchases may be of any maturity.
Simplify's Growing Lineup
“At Simplify, we are always looking for ways to provide investors with innovative tools that provide access to useful and compelling strategies,” added Harley Bassman, Managing Partner at Simplify. “RFIX was designed to provide a transparent and capital-efficient solution for those looking to express a bullish view on bonds and hedge against potential risks. By incorporating OTC derivative profiles typically reserved for institutional investors, RFIX represents an important step in democratizing access to a strategy whose time very much may have arrived.”
Simplify currently has more than 30 different ETFs listed in the United States. As a whole, these funds amount to over $6.2 billion in assets under management.
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