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Q&A with Simplify


Published
March 17, 2022
Brian Kelleher
Chief Revenue Officer, Simplify

This week we sit down with Brian Kelleher at Simplify to discuss the company’s active ETF platform and how the active ETF market is evolving.


Simplify entered the active ETF market less than two years ago with the launch of three NYSE listed ETFs and a vision to help advisors tackle portfolio challenges with an innovative set of options-based strategies. What led to the decision to enter in 2020?

At the end of 2019, we had made the decision to launch the company and platform with the belief that there was a dearth of ETFs that dealt with tail protection and asymmetric payoff profiles. With the passage of the SEC’s ETF rule in 2019 and the derivatives rule in 2020, we had the unique opportunity to create and launch innovative options-based strategies previously unavailable to the public. The initial products that we launched (NYSE listed: SPD, SPUC, SPYC) were designed to provide protection during extreme market moves using options overlays. The volatility backdrop of 2020 helped investors realize the importance of tail protection strategies.

In short order, the Simplify ETF suite has grown to include 22 ETFs covering a variety of asset classes. What allowed you to scale the line-up so quickly?

Simplify is filling an important and unmet need in the ETF market. We are offering solutions that have historically been only available via hedge fund or structure products, and are doing it in fully transparent, cost-effective ETFs. There is a sizable group of forward-thinking investors that see the value of what we are doing, which has enabled us to have a very ambitious launch calendar where we can quickly get our ETFs up to scale and move on to our next pioneering product.

In regard to our build-out as a firm, we have been extremely fortunate to bring on some incredible talent. We had originally intended the firm to be a dynamic, tech-like, fast-moving culture, but the work from anywhere environment of today has allowed us to bring on some industry legends, like Harley Bassman and Michael Green as well as hire top talent irrespective of location. As a result, our thought leadership and product development capabilities compete with companies that are exponentially larger than ours. We have a great group of brilliant individuals who genuinely enjoy each other and what we’re building.

Simplify recently surpassed $1.25 billion in assets. What are your early observations on the trading and adoption of the products? What plans and hurdles do you see on the horizon?

In a world where tail risks may be more extreme, smart allocators are looking for ways to build more robust portfolios that are differentiated from the crowd of generic allocation models. Simplify’s plan is to constantly build and iterate on products - 22 and counting as you mention above. We design to address a wide variety of market conditions and acknowledge that the only certainty is uncertainty. Our next-gen tools aim to help investors manage portfolio volatility, enhance yield, hedge specific market exposures and trim or enhance tail event exposure.

As far as hurdles on the horizon, we know that competitors see the success we’re having and will try to emulate some of our ideas. Simplify’s key differentiators in this space are an incredible depth of talent and unique products all offered at reasonable prices. We will continue to modernize the ETF space by offering unique solutions to help allocators build better portfolios.

What are the key considerations that investors should contemplate when considering actively managed ETFs?

Whether actively managed or indexed, it is critical for investors to understand what they are investing in and what to expect in different market environments. There is so much great data out there on ETFs; the NYSE’s website is one of many useful resources for investors. The Simplify team is passionate about engaging on topics and macro trends in the financial industry as well as being accessible to answer questions.

Lastly, what guidance would you provide sponsors as they consider expanding their product offerings to include actively managed ETFs?

Education is critical when launching an ETF. New issuers really need to have a good understanding of what needs their strategy is meeting, who is going to buy the product, and the ins and out of trading. NYSE has been a terrific collaborator with Simplify’s leadership over the years. Several of us have had the good fortune of working with the NYSE at different firms, with many types of underlying exposures. NYSE is a tremendous organization to work with, who has supporting many aspects of our growth as a firm.

Active ETF Stat Pack

Firms
# of Issuers142
# of New Issuers 202249
ProductsAssets
# of ETFs692AUM ($B)$295.56
# of New Launches 20222353 Yr AUM CAGR165%
Avg. ER0.50%5 Yr AUM CAGR62%
Cash FlowTrading
YTD Cash Flow ($B)$79.60YTD ADV (Shares)120,638,815
3 Yr Cash Flow$170.10YTD ADV ($)$5.35 B
5 Yr Cash Flow$210.10YTD Avg. Spread (bps)*32.36

Source: Factset & NYSE Internal Database and Consolidated Tape Statistics as of 2/14/2022

*Simple average

Active, Semi-Transparent Update

TickerInceptionNameAUMYTD Flows30 Day Median Spread (bps)ADV (shares)StructureLMMExpense Ratio
EQOP9/17/20Natixis U.S. Equity Opportunities ETF$9,620,533$323,14815.59199NYSE AMSCitadel0.90%
VNSE9/17/20Natixis Vaughan Nelson Select ETF$6,164,531$1,561,01616.89761NYSE AMSCitadel0.80%
VNMC9/17/20Natixis Vaughan Nelson Mid Cap ETF$8,234,329$26,02716.021,099NYSE AMSCitadel0.85%
ESGA7/15/20American Century Sustainable Equity ETF$126,449,040$(19,782,117)14.5717,440NYSE AMSCitadel0.39%
MID7/15/20American Century Mid Cap Growth Impact ETF$23,409,561$3,521,50714.85,553NYSE AMSCitadel0.45%
ESGY7/1/21American Century Sustainable Growth ETF$6,142,176$28,9925.02215NYSE AMSCitadel0.39%
NDVG8/5/21Nuveen Dividend Growth ETF$6,051,240$-7.36949NYSE AMSCitadel0.64%
NSCS8/5/21Nuveen Small Cap Select ETF$6,008,444$-12.64491NYSE AMSCitadel0.85%
NWLG8/5/21Nuveen Winslow Large-Cap Growth ESG ETF$5,169,384$(16,226)7.61,575NYSE AMSCitadel0.64%
NUGO9/28/21Nuveen Growth Opportunities ETF$2,771,126,392$80,531,3447.58110,724NYSE AMSCitadel0.55%
SAEF11/16/21Schwab Ariel ESG ETF$10,169,550$3,457,45024.975,938NYSE AMSFlow Traders0.59%
FDG4/2/20American Century Focused Dynamic Growth ETF$153,773,493$(17,580,429)15.2718,575ActiveSharesCitadel0.45%
FLV4/2/20American Century Focused Large Cap Value ETF$212,972,661$(17,724,853)14.6313,709ActiveSharesCitadel0.42%
CFCV5/28/20ClearBridge Focus Value ETF$3,367,597$3955.34410ActiveSharesGTS0.50%
FBCG6/4/20Fidelity Blue Chip Growth ETF$385,624,035$(23,024,335)27.07181,926Fidelity ProxyGTS0.59%
FBCV6/4/20Fidelity Blue Chip Value ETF$108,287,080$8,083,98024.3135,556Fidelity ProxyGTS0.59%
FMIL6/4/20Fidelity New Millennium ETF$60,825,098$(750,373)25.8716,478Fidelity ProxyGTS0.59%
FGRO2/4/21Fidelity Growth Opportunities ETF$51,249,688$5,783,5285.9390,844Fidelity ProxyCitadel0.59%
FMAG2/4/21Fidelity Magellan ETF$45,613,480$(373,933)15.0127,260Fidelity ProxyRBC0.59%
FPRO2/4/21Fidelity Real Estate Investment ETF$21,686,175$728,7434.199,748Fidelity ProxyCitadel0.59%
FSMO2/4/21Fidelity Small/Mid-Cap Opportunities ETF$28,402,790$(660,435)15.211,583Fidelity ProxyRBC0.59%
FSST6/17/21Fidelity Sustainability U.S. Equity ETF$5,426,685$-15.391,756Fidelity ProxyRBC0.59%
FDWM6/17/21Fidelity Women's Leadership ETF$2,709,885$-17.941,081Fidelity ProxyRBC0.59%
TCHP8/5/20T. Rowe Price Blue Chip Growth ETF$252,351,086$41,004,40812.67171,029T Rowe ProxyVirtu0.57%
TDVG8/5/20T. Rowe Price Dividend Growth ETF$119,749,187$7,018,09211.1529,550T Rowe ProxyRBC0.50%
TEQI8/5/20T. Rowe Price Equity Income ETF$71,331,091$15,311,79710.121,123T Rowe ProxyVirtu0.54%
TGRW8/5/20T. Rowe Price Growth Stock ETF$41,389,175$2,625,51213.559,528T Rowe ProxyRBC0.52%
TSPA6/8/21T. Rowe Price U.S. Equity Research ETF$22,356,652$1,732,11911.382,801T Rowe ProxyRBC0.52%
IVDG12/22/20Invesco Focused Discovery Growth ETF$989,381$-17.48338Invesco ModelCitadel0.59%
IVSG12/22/20Invesco Select Growth ETF$1,179,512$-16.28361Invesco ModelCitadel0.48%
IVLC12/22/20Invesco US Large Cap Core ESG ETF$7,427,214$1,105,10013.023,753Fidelity ProxyCitadel0.48%
IVRA12/22/20Invesco Real Assets ESG ETF$2,890,105$447,96036.76922Fidelity ProxyCitadel0.59%
LOPP2/1/21
Gabelli Love Our Planet & People ETF
$13,305,390$3,319,190116.052,497ActiveSharesGTS0.90%
GGRW2/16/21Gabelli Growth Innovators ETF$3,174,400$-46.66879ActiveSharesGTS0.90%
GAST1/5/22Gabelli Asset ETF$4,660,740$244,38049.24116ActiveSharesGTS0.90%
FRTY3/1/21Alger Mid Cap 40 ETF$31,749,000$(50,625)41.423,370ActiveSharesVirtu0.60%
ATFV5/4/21Alger 35 ETF$10,265,500$(1,518,875)38.722,950ActiveSharesVirtu0.55%
REIT2/26/21ALPS Active REIT ETF$19,597,658$(5,429,850)33.529,988Blue TractorGTS0.68%
STNC3/16/21Stance Equity ESG Large Cap Core ETF$36,541,418$2,084,08930.712,770Blue TractorGTS0.85%
PFUT5/26/21Putnam Sustainable Future ETF$7,519,657$545,43637.462,197Fidelity ProxyVirtu0.64%
PLDR5/26/21Putnam Sustainable Leaders ETF$6,502,734$6,66314.6384Fidelity ProxyRBC0.59%
PGRO5/26/21Putnam Focused Large Cap Growth ETF$9,117,666$703,53312.942,473Fidelity ProxyRBC0.55%
PVAL5/26/21Putnam Focused Large Cap Value ETF$22,804,790$4,842,90732.099,808Fidelity ProxyVirtu0.55%
HFGO11/9/21Hartford Large Cap Growth ETF$67,138,650$57,613,18618.04260,894Fidelity ProxyCitadel0.59%
Total/Average$4,743,386,200$98,124,91022.67850,7090.60%

Source: FactSet & NYSE Internal Database and Consolidated Tape Statistics as of 3/11/2022

*Simple average

Year to Date ETF Launches

TickerNameIssuerLaunch DateAsset ClassAUM
IRBAiMGP RBA Responsible Global Allocation ETFLitman Gregory Capital Partners LLC2/1/22Asset Allocation$1,442,850
IWINAmplify Inflation Fighter ETFAmplify Investments2/2/22Alternatives$12,674,710
WINNHarbor Long-Term Growers ETFHarbor2/3/22Equity$8,151,000
NETZEngine No 1 Transform Climate ETFEngine No. 1 LLC2/3/22Equity$86,758,633
WGMIValkyrie Bitcoin Miners ETFValkyrie Funds LLC2/8/22Equity$6,619,250
LETBAdvisorShares Let Bob AI Powered Momentum ETFAdvisorShares2/9/22Equity$21,850,500
BFIXBuild Bond Innovation ETFBuild Asset Management LLC2/10/22Asset Allocation$28,217,205
CDXSimplify High Yield PLUS Credit Hedge ETFSimplify Asset Management Inc.2/15/22Fixed Income$22,780,925
AGGHSimplify Aggregate Bond PLUS Credit Hedge ETFSimplify Asset Management Inc.2/15/22Fixed Income$1,241,125
FSYDFidelity Sustainable High Yield ETFFidelity2/17/22Fixed Income$9,938,220
HYBLSPDR Blackstone High Income ETFState Street2/17/22Fixed Income$127,887,349
DFSVDimensional US Small Cap Value ETFDimensional Holdings2/24/22Equity$8,866,410
DUHPDimensional US High Profitability ETFDimensional Holdings2/24/22Equity$156,845,000
DFARDimensional US Real Estate ETFDimensional Holdings2/24/22Equity$10,284,000
CGUSCapital Group Core Equity ETFThe Capital Group Companies2/24/22Equity$38,752,640
CGGRCapital Group Growth ETFThe Capital Group Companies2/24/22Equity$38,814,347
CGXUCapital Group International Focus Equity ETFThe Capital Group Companies2/24/22Equity$33,270,686
CGDVCapital Group Dividend Value ETFThe Capital Group Companies2/24/22Equity$59,133,592
CGGOCapital Group Global Growth Equity ETFThe Capital Group Companies2/24/22Equity$36,090,000
CGCPCapital Group Core Plus Income ETFThe Capital Group Companies2/24/22Fixed Income$85,059,076
HAUSHome Appreciation U.S. REIT ETFToroso Investments3/1/22Equity$1,039,605
IPDPDividend Performers ETFSheaff Brock Capital Management LLC3/7/22Equity$15,614,124
IPPPPreferred-Plus ETFSheaff Brock Capital Management LLC3/7/22Fixed Income$12,775,966
BSTPInnovator Buffer Step-Up Strategy ETFInnovator3/8/22Equity$2,572,000
PSTPInnovator Power Buffer Step-Up Strategy ETFInnovator3/8/22Equity$1,933,500
CTASimplify Managed Futures Strategy ETFSimplify Asset Management Inc.3/8/22Alternatives$2,466,325
Total - 26 New ETFs$831,079,038

Source: Factset as of 3/11/2022

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