Simplify Debuts K-1 Free Commodities ETF
Today, Simplify Asset Management entered new territory with the launch of a long/short commodity futures exchange-traded fund that is intended to outperform during inflationary periods. The Simplify Commodities Strategy No K-1 ETF (HARD) is the issuer’s first commodities-focused product; the firm is primarily known for its options strategies.
It has an expense ratio of 0.75% and lists on the NYSE Arca.
“The role that commodities can play in hedging portfolios against strong inflation has long been understood by investors, but just as well understood is the way in which long-only commodity strategies tend to underperform over long time horizon,” said Simplify Chief Investment Officer and Co-Founder David Berns in a press release.
“With HARD, we’ve designed a means by which investors can access commodity exposure for both the short- and the long-term, with the potential to perform well during periods of inflation as well as in more typical market environments,” he added, noting that the fund is designed to provide enhanced commodity exposure as well as serve as an inflation hedge.
The new fund is actively managed and structured as a ’40 Act fund, which allows it to avoid the need for K-1 tax forms. As with most ETFs of this nature, HARD uses a Cayman Islands-based subsidiary to hold its futures contracts rather than holding them directly, with the subsidiary representing up to 25% of the fund’s assets, the prospectus says.
Altis Partners, a commodity trading advisor, manages the futures portfolio, relying on systematic price trend and fundamental reversion models. Although it can take short positions when indicated by its long/short forecasting models, HARD’s prospectus says that the fund will generally have a net long bias.
According to the press release, the fund’s portfolio can invest in commodity futures on crude oil, RBOB gasoline, heating oil, natural gas, copper, gold, silver, corn, wheat, soybeans and soybean oil.
Right now, the largest broad commodities ETF is the $5.5 billion Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC). It has an expense ratio of 0.59%.
Simplify has 26 other ETFs in its lineup, which is primarily designed to provide individual investors with institutional-quality derivatives strategies. Its total assets under management currently amount to roughly $1.3 billion.
Contact Heather Bell at heather.bell@etf.com
Recommended Stories
