NEW YORK--(BUSINESS WIRE)--Simplify Asset Management (“Simplify”), a leading provider of Exchange Traded Funds (“ETFs”), today announced the launch of the Simplify Downside Interest Rate Hedge Strategy ETF (RFIX), an innovative addition to its lineup of specialized ETFs designed to meet the challenges of today’s dynamic markets.
RFIX is built for investors seeking to profit from falling long-term interest rates. The fund provides exposure akin to a mirror image of that provided by the PFIX which seeks to hedge interest rate movements from rising long-term interest rates. Since launching in 2021, PFIX has garnered a 5-star Morningstar rating as of 10/31/24 out of 160 funds in the Inflation-Protected Bond fund category based on risk-adjusted returns, while dramatically outperforming its peers in the Inflation-Protected Bond Fund category.
“At Simplify, we are always looking for ways to provide investors with innovative tools that provide access to useful and compelling strategies,” said Harley Bassman, Managing Partner at Simplify, and creator of the approaches underpinning both RFIX and PFIX. “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.”
RFIX uses a proprietary approach centered on a 7-year OTC receiver swaption, which functions similarly to a long-term call option on U.S. Treasury bonds. The fund’s design also maximizes positive convexity and minimizes time decay, providing investors with a significant hedge against market stress scenarios where Treasury yields tend to decline. Additionally, the ETF structure ensures daily liquidity and eliminates the need for K-1 tax forms, making it an appealing choice for a broad range of investors.
“The capital-efficient structure of RFIX enables investors to achieve their desired duration exposure with a smaller capital outlay compared to traditional bond funds,” said Bassman. “This frees up capital for use in other strategies and asset categories, resulting in more diverse and robust portfolios.”
The Simplify team also produces some of the investment industry’s most engaging and informative content, including deep dives into the various investment strategies, reactions to headline-making news and trends, and interviews with some of the most compelling names in research, trading and portfolio construction, which you can access here: https://www.simplify.us/news-media.
ABOUT SIMPLIFY ASSET MANAGEMENT INC
Simplify Asset Management Inc. is a Registered Investment Adviser founded in 2020 to help advisors tackle the most pressing portfolio challenges with an innovative set of options-based strategies. By accounting for real-world investor needs and market behavior, along with the non-linear power of options, our strategies allow for the tailored portfolio outcomes for which clients are looking. For more information, visit www.simplify.us.
GLOSSARY:
Duration: A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates.
Convexity: A measure of how the duration of a bond changes as interest rates change. The greater the convexity of a bond, the greater that change will be for a specific interest rate shift.
IMPORTANT INFORMATION:
Investors should carefully consider the investment objectives, risks, charges, and expenses of Exchange Traded Funds (ETFs) before investing. To obtain an ETF's prospectus or Summary prospectus containing this and other important information, please call (855) 772-8488, or visit SimplifyETFs.com. Please read the prospectus carefully before you invest.
An investment in the fund involves risk, including possible loss of principal.
The fund is actively-managed is subject to the risk that the strategy may not produce the intended results. The fund is new and has a limited operating history to evaluate. The Fund invests in ETFs (Exchange-Traded Funds) and entails higher expenses than if invested into the underlying ETF directly. The lower the credit quality, the more volatile performance will be. When junk bonds sell off, the lowest-rated bonds are typically hit hardest known as blow up risk. Likewise, the riskiest bonds typically rise fastest in a bull market however these investments that don't have a credit rating are typically the most volatile, hard to price and the least liquid.
The use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. These risks include (i) the risk that the counterparty to a derivative transaction may not fulfill its contractual obligations; (ii) risk of mispricing or improper valuation; and (iii) the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate, or index. Derivative prices are highly volatile and may fluctuate substantially during a short period of time. The use of leverage by the Fund, such as borrowing money to purchase securities or the use of options, will cause the Fund to incur additional expenses and magnify the Fund’s gains or losses. The Fund's investment in fixed income securities is subject to credit risk (the debtor may default) and prepayment risk (an obligation paid early) which could cause its share price and total return to be reduced. Typically, as interest rates rise the value of bond prices will decline and the fund could lose value.
While the option overlay is intended to improve the Fund’s performance, there is no guarantee that it will do so. Utilizing an option overlay strategy involves the risk that as the buyer of a put or call option, the Fund risks losing the entire premium invested in the option if the Fund does not exercise the option. Also, securities and options traded in over-the-counter markets may trade less frequently and in limited volumes and thus exhibit more volatility and liquidity risk.
TIPS Risk: TIPS are debt instruments issued by the by the United States Department of the Treasury. The principal of TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. Fixed Income Securities Risk. When the Fund invests in fixed income securities, the value of your investment in the Fund will fluctuate with changes in interest rates. Non-Diversified Fund Risk. Because the Fund is non-diversified and may invest a greater portion of its assets in fewer issuers than a diversified fund, changes in the market value of a single portfolio holding could cause greater fluctuations in the Fund’s share price than would occur in a diversified fund. Volatility Risk. Significant short-term price movements could adversely impact the performance of the Fund. The Fund’s performance may be volatile, which means that the Fund’s performance may be subject to substantial short-term changes up or down.
The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a 3-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% 3-year rating for 36-59 months of total returns, 60% 5-year rating/40% 3-year rating for 60-119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all 3 rating periods. The three-year period ending 10/31/24. © 2024 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Simplify ETFs are distributed by Foreside Financial Services, LLC. Foreside and Simplify are not related.
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