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.
|# of Issuers||142|
|# of New Issuers 2022||49|
|# of ETFs||692||AUM ($B)||$295.56|
|# of New Launches 2022||235||3 Yr AUM CAGR||165%|
|Avg. ER||0.50%||5 Yr AUM CAGR||62%|
|YTD Cash Flow ($B)||$79.60||YTD ADV (Shares)||120,638,815|
|3 Yr Cash Flow||$170.10||YTD ADV ($)||$5.35 B|
|5 Yr Cash Flow||$210.10||YTD Avg. Spread (bps)*||32.36|
Source: Factset & NYSE Internal Database and Consolidated Tape Statistics as of 2/14/2022
|Ticker||Inception||Name||AUM||YTD Flows||30 Day Median Spread (bps)||ADV (shares)||Structure||LMM||Expense Ratio|
|EQOP||9/17/20||Natixis U.S. Equity Opportunities ETF||$9,620,533||$323,148||15.59||199||NYSE AMS||Citadel||0.90%|
|VNSE||9/17/20||Natixis Vaughan Nelson Select ETF||$6,164,531||$1,561,016||16.89||761||NYSE AMS||Citadel||0.80%|
|VNMC||9/17/20||Natixis Vaughan Nelson Mid Cap ETF||$8,234,329||$26,027||16.02||1,099||NYSE AMS||Citadel||0.85%|
|ESGA||7/15/20||American Century Sustainable Equity ETF||$126,449,040||$(19,782,117)||14.57||17,440||NYSE AMS||Citadel||0.39%|
|MID||7/15/20||American Century Mid Cap Growth Impact ETF||$23,409,561||$3,521,507||14.8||5,553||NYSE AMS||Citadel||0.45%|
|ESGY||7/1/21||American Century Sustainable Growth ETF||$6,142,176||$28,992||5.02||215||NYSE AMS||Citadel||0.39%|
|NDVG||8/5/21||Nuveen Dividend Growth ETF||$6,051,240||$-||7.36||949||NYSE AMS||Citadel||0.64%|
|NSCS||8/5/21||Nuveen Small Cap Select ETF||$6,008,444||$-||12.64||491||NYSE AMS||Citadel||0.85%|
|NWLG||8/5/21||Nuveen Winslow Large-Cap Growth ESG ETF||$5,169,384||$(16,226)||7.6||1,575||NYSE AMS||Citadel||0.64%|
|NUGO||9/28/21||Nuveen Growth Opportunities ETF||$2,771,126,392||$80,531,344||7.58||110,724||NYSE AMS||Citadel||0.55%|
|SAEF||11/16/21||Schwab Ariel ESG ETF||$10,169,550||$3,457,450||24.97||5,938||NYSE AMS||Flow Traders||0.59%|
|FDG||4/2/20||American Century Focused Dynamic Growth ETF||$153,773,493||$(17,580,429)||15.27||18,575||ActiveShares||Citadel||0.45%|
|FLV||4/2/20||American Century Focused Large Cap Value ETF||$212,972,661||$(17,724,853)||14.63||13,709||ActiveShares||Citadel||0.42%|
|CFCV||5/28/20||ClearBridge Focus Value ETF||$3,367,597||$39||55.34||410||ActiveShares||GTS||0.50%|
|FBCG||6/4/20||Fidelity Blue Chip Growth ETF||$385,624,035||$(23,024,335)||27.07||181,926||Fidelity Proxy||GTS||0.59%|
|FBCV||6/4/20||Fidelity Blue Chip Value ETF||$108,287,080||$8,083,980||24.31||35,556||Fidelity Proxy||GTS||0.59%|
|FMIL||6/4/20||Fidelity New Millennium ETF||$60,825,098||$(750,373)||25.87||16,478||Fidelity Proxy||GTS||0.59%|
|FGRO||2/4/21||Fidelity Growth Opportunities ETF||$51,249,688||$5,783,528||5.93||90,844||Fidelity Proxy||Citadel||0.59%|
|FMAG||2/4/21||Fidelity Magellan ETF||$45,613,480||$(373,933)||15.01||27,260||Fidelity Proxy||RBC||0.59%|
|FPRO||2/4/21||Fidelity Real Estate Investment ETF||$21,686,175||$728,743||4.19||9,748||Fidelity Proxy||Citadel||0.59%|
|FSMO||2/4/21||Fidelity Small/Mid-Cap Opportunities ETF||$28,402,790||$(660,435)||15.2||11,583||Fidelity Proxy||RBC||0.59%|
|FSST||6/17/21||Fidelity Sustainability U.S. Equity ETF||$5,426,685||$-||15.39||1,756||Fidelity Proxy||RBC||0.59%|
|FDWM||6/17/21||Fidelity Women's Leadership ETF||$2,709,885||$-||17.94||1,081||Fidelity Proxy||RBC||0.59%|
|TCHP||8/5/20||T. Rowe Price Blue Chip Growth ETF||$252,351,086||$41,004,408||12.67||171,029||T Rowe Proxy||Virtu||0.57%|
|TDVG||8/5/20||T. Rowe Price Dividend Growth ETF||$119,749,187||$7,018,092||11.15||29,550||T Rowe Proxy||RBC||0.50%|
|TEQI||8/5/20||T. Rowe Price Equity Income ETF||$71,331,091||$15,311,797||10.1||21,123||T Rowe Proxy||Virtu||0.54%|
|TGRW||8/5/20||T. Rowe Price Growth Stock ETF||$41,389,175||$2,625,512||13.55||9,528||T Rowe Proxy||RBC||0.52%|
|TSPA||6/8/21||T. Rowe Price U.S. Equity Research ETF||$22,356,652||$1,732,119||11.38||2,801||T Rowe Proxy||RBC||0.52%|
|IVDG||12/22/20||Invesco Focused Discovery Growth ETF||$989,381||$-||17.48||338||Invesco Model||Citadel||0.59%|
|IVSG||12/22/20||Invesco Select Growth ETF||$1,179,512||$-||16.28||361||Invesco Model||Citadel||0.48%|
|IVLC||12/22/20||Invesco US Large Cap Core ESG ETF||$7,427,214||$1,105,100||13.02||3,753||Fidelity Proxy||Citadel||0.48%|
|IVRA||12/22/20||Invesco Real Assets ESG ETF||$2,890,105||$447,960||36.76||922||Fidelity Proxy||Citadel||0.59%|
Gabelli Love Our Planet & People ETF
|GGRW||2/16/21||Gabelli Growth Innovators ETF||$3,174,400||$-||46.66||879||ActiveShares||GTS||0.90%|
|GAST||1/5/22||Gabelli Asset ETF||$4,660,740||$244,380||49.24||116||ActiveShares||GTS||0.90%|
|FRTY||3/1/21||Alger Mid Cap 40 ETF||$31,749,000||$(50,625)||41.4||23,370||ActiveShares||Virtu||0.60%|
|ATFV||5/4/21||Alger 35 ETF||$10,265,500||$(1,518,875)||38.72||2,950||ActiveShares||Virtu||0.55%|
|REIT||2/26/21||ALPS Active REIT ETF||$19,597,658||$(5,429,850)||33.52||9,988||Blue Tractor||GTS||0.68%|
|STNC||3/16/21||Stance Equity ESG Large Cap Core ETF||$36,541,418||$2,084,089||30.71||2,770||Blue Tractor||GTS||0.85%|
|PFUT||5/26/21||Putnam Sustainable Future ETF||$7,519,657||$545,436||37.46||2,197||Fidelity Proxy||Virtu||0.64%|
|PLDR||5/26/21||Putnam Sustainable Leaders ETF||$6,502,734||$6,663||14.6||384||Fidelity Proxy||RBC||0.59%|
|PGRO||5/26/21||Putnam Focused Large Cap Growth ETF||$9,117,666||$703,533||12.94||2,473||Fidelity Proxy||RBC||0.55%|
|PVAL||5/26/21||Putnam Focused Large Cap Value ETF||$22,804,790||$4,842,907||32.09||9,808||Fidelity Proxy||Virtu||0.55%|
|HFGO||11/9/21||Hartford Large Cap Growth ETF||$67,138,650||$57,613,186||18.04||260,894||Fidelity Proxy||Citadel||0.59%|
Source: FactSet & NYSE Internal Database and Consolidated Tape Statistics as of 3/11/2022
|Ticker||Name||Issuer||Launch Date||Asset Class||AUM|
|IRBA||iMGP RBA Responsible Global Allocation ETF||Litman Gregory Capital Partners LLC||2/1/22||Asset Allocation||$1,442,850|
|IWIN||Amplify Inflation Fighter ETF||Amplify Investments||2/2/22||Alternatives||$12,674,710|
|WINN||Harbor Long-Term Growers ETF||Harbor||2/3/22||Equity||$8,151,000|
|NETZ||Engine No 1 Transform Climate ETF||Engine No. 1 LLC||2/3/22||Equity||$86,758,633|
|WGMI||Valkyrie Bitcoin Miners ETF||Valkyrie Funds LLC||2/8/22||Equity||$6,619,250|
|LETB||AdvisorShares Let Bob AI Powered Momentum ETF||AdvisorShares||2/9/22||Equity||$21,850,500|
|BFIX||Build Bond Innovation ETF||Build Asset Management LLC||2/10/22||Asset Allocation||$28,217,205|
|CDX||Simplify High Yield PLUS Credit Hedge ETF||Simplify Asset Management Inc.||2/15/22||Fixed Income||$22,780,925|
|AGGH||Simplify Aggregate Bond PLUS Credit Hedge ETF||Simplify Asset Management Inc.||2/15/22||Fixed Income||$1,241,125|
|FSYD||Fidelity Sustainable High Yield ETF||Fidelity||2/17/22||Fixed Income||$9,938,220|
|HYBL||SPDR Blackstone High Income ETF||State Street||2/17/22||Fixed Income||$127,887,349|
|DFSV||Dimensional US Small Cap Value ETF||Dimensional Holdings||2/24/22||Equity||$8,866,410|
|DUHP||Dimensional US High Profitability ETF||Dimensional Holdings||2/24/22||Equity||$156,845,000|
|DFAR||Dimensional US Real Estate ETF||Dimensional Holdings||2/24/22||Equity||$10,284,000|
|CGUS||Capital Group Core Equity ETF||The Capital Group Companies||2/24/22||Equity||$38,752,640|
|CGGR||Capital Group Growth ETF||The Capital Group Companies||2/24/22||Equity||$38,814,347|
|CGXU||Capital Group International Focus Equity ETF||The Capital Group Companies||2/24/22||Equity||$33,270,686|
|CGDV||Capital Group Dividend Value ETF||The Capital Group Companies||2/24/22||Equity||$59,133,592|
|CGGO||Capital Group Global Growth Equity ETF||The Capital Group Companies||2/24/22||Equity||$36,090,000|
|CGCP||Capital Group Core Plus Income ETF||The Capital Group Companies||2/24/22||Fixed Income||$85,059,076|
|HAUS||Home Appreciation U.S. REIT ETF||Toroso Investments||3/1/22||Equity||$1,039,605|
|IPDP||Dividend Performers ETF||Sheaff Brock Capital Management LLC||3/7/22||Equity||$15,614,124|
|IPPP||Preferred-Plus ETF||Sheaff Brock Capital Management LLC||3/7/22||Fixed Income||$12,775,966|
|BSTP||Innovator Buffer Step-Up Strategy ETF||Innovator||3/8/22||Equity||$2,572,000|
|PSTP||Innovator Power Buffer Step-Up Strategy ETF||Innovator||3/8/22||Equity||$1,933,500|
|CTA||Simplify Managed Futures Strategy ETF||Simplify Asset Management Inc.||3/8/22||Alternatives||$2,466,325|
|Total - 26 New ETFs||$831,079,038|
Source: Factset as of 3/11/2022
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