On Tuesday, Simplify Asset Management expanded its ETF suite with the launch of two new funds.
Both funds are actively managed, with net expense ratios sitting at 75 basis points. These funds look to provide investors with a source of monthly income.
A 30-Barrier Put Strategy
The Simplify Barrier Income ETF (SBAR) looks to offer an alternative to a fixed income strategy. To do so, SBAR utilizes a two-pronged approach.
First, the fund looks to build long-term income by investing in U.S. government securities. These are anticipated to create an average portfolio duration of two years or less.
Crucially, SBAR fortifies its income by selling a laddered selection of 30-barrier put options. These put options can offer an interesting risk profile for investors seeking to build income. Since the 30-barrier put options showcase the potential risk for the fund ahead of time, investors can have a better idea what they’re getting into when they invest in SBAR.
High Income Potential
Meanwhile, the Simplify Target 15 Distribution ETF (XV) looks to provide a source of high income for its investors. As the fund’s title implies, XV’s goal is to generate an annualized distribution rate of 15%.
Much like SBAR, XV also invests in U.S. Treasuries to build an average portfolio duration of two years or less. However, the fund stands out through its use of barrier put options.
Unlike SBAR, XV will tweak its levels in order to facilitate the fund’s 15% annualized distribution rate. As such, the fund can offer more flexibility in its mission to generate strong income for investors.
XV and SBAR come online in a moment where active management may be more valuable than ever. With the market outlook relatively uncertain, active funds can help navigate the chaos while delivering on their investment goals.
“Our investors are continually seeking diversified sources of income,” added David Berns, CIO and Co-Founder of Simplify. “We are very excited to address this need with today’s launch of SBAR and XV as we continue our efforts to offer products designed to address the most pressing concerns in building today’s modern portfolios.”
Simplify currently has more than 35 ETFs listed in the United States. In total, these funds represent over $6.8 billion in assets under management.
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