Simplify Adds to Its Growing Lineup of Fixed Income Solutions With the Launch of the Simplify National Muni Bond ETF (NMB)
Simplify Asset Management has launched the Simplify National Muni Bond ETF (NMB), an actively managed municipal bond ETF. The fund, sub-advised by Foundation Credit, aims to achieve attractive tax-free income through municipal bond coupons while generating taxable gains by trading undervalued municipal securities. NMB also incorporates a risk-managed, income-generating options selling strategy across various instruments.
The ETF combines three potential return sources: muni bond yields, opportunistic investments in overlooked securities, and income from option-writing. This approach aims to provide after-tax yields exceeding national municipal bond indexes. NMB joins Simplify's growing lineup of fixed income solutions, including the $1.2 billion Simplify MBS ETF (MTBA) and the Simplify Short Term Treasury Futures Strategy ETF (TUA).
Simplify Asset Management ha lanciato il Simplify National Muni Bond ETF (NMB), un ETF obbligazionario municipale gestito attivamente. Il fondo, co-consigliato da Foundation Credit, mira a ottenere un reddito attraente esente da tasse attraverso i cedolari delle obbligazioni municipali, generando nel contempo guadagni tassabili mediante il trading di titoli municipali sottovalutati. NMB incorpora anche una strategia di vendita di opzioni con gestione del rischio e generazione di reddito attraverso vari strumenti.
L'ETF combina tre potenziali fonti di rendimento: i rendimenti delle obbligazioni municipali, investimenti opportunistici in titoli trascurati e reddito dalla scrittura di opzioni. Questo approccio mira a fornire rendimenti post-tasse superiori agli indici obbligazionari municipali nazionali. NMB si unisce alla crescente gamma di soluzioni a reddito fisso di Simplify, che include il Simplify MBS ETF da 1,2 miliardi di dollari (MTBA) e il Simplify Short Term Treasury Futures Strategy ETF (TUA).
Simplify Asset Management ha lanzado el Simplify National Muni Bond ETF (NMB), un ETF de bonos municipales gestionado activamente. El fondo, asesorado por Foundation Credit, tiene como objetivo lograr ingresos atractivos libres de impuestos a través de los cupones de bonos municipales mientras genera ganancias sujetas a impuestos mediante el comercio de valores municipales subvaluados. NMB también incorpora una estrategia de venta de opciones gestionada con enfoque en la generación de ingresos a través de varios instrumentos.
El ETF combina tres fuentes potenciales de retorno: rendimientos de bonos municipales, inversiones oportunistas en valores pasados por alto, y ingresos de la escritura de opciones. Este enfoque busca proporcionar rendimientos después de impuestos que superen los índices de bonos municipales nacionales. NMB se une a la creciente gama de soluciones de ingresos fijos de Simplify, que incluye el Simplify MBS ETF de 1,2 mil millones de dólares (MTBA) y el Simplify Short Term Treasury Futures Strategy ETF (TUA).
Simplify Asset Management는 Simplify National Muni Bond ETF (NMB)를 출시했습니다. 이는 적극적으로 관리되는 지방채 ETF입니다. 이 펀드는 Foundation Credit의 자문을 받아 세금 없는 매력적인 소득을 지방채 쿠폰을 통해 달성하고 세금이 부과되는 이익을 저평가된 지방 증권 거래를 통해 생성하는 것을 목표로 하고 있습니다. NMB는 또한 다양한 도구를 통해 위험 관리 및 소득 창출 옵션 판매 전략을 통합합니다.
ETF는 세 가지 잠재적 수익원을 결합합니다: 지방채 수익, 간과된 증권에 대한 기회 투자를 통한 수익 및 옵션 작성을 통한 수익. 이 접근 방식은 국가 지방채 지수를 초과하는 세후 수익률을 제공하는 것을 목표로 합니다. NMB는 Simplify의 12억 달러 규모의 Simplify MBS ETF (MTBA)와 Simplify Short Term Treasury Futures Strategy ETF (TUA)를 포함한 고정 수입 솔루션의 증가하는 라인업에 합류했습니다.
Simplify Asset Management a lancé le Simplify National Muni Bond ETF (NMB), un ETF obligataire municipal géré activement. Le fonds, conseillé par Foundation Credit, vise à réaliser un revenu attrayant exonéré d'impôts grâce aux coupons obligataires municipaux tout en générant des gains imposables par le biais du trading de titres municipaux sous-évalués. NMB intègre également une stratégie de vente d'options gérée pour la génération de revenus à travers divers instruments.
L'ETF combine trois sources potentielles de rendement: les rendements des obligations municipales, les investissements opportunistes dans des titres négligés, et les revenus provenant de l'écriture d'options. Cette approche vise à fournir des rendements après impôts dépassant les indices obligataires municipaux nationaux. NMB rejoint la gamme croissante de solutions de revenu fixe de Simplify, incluant le Simplify MBS ETF de 1,2 milliard USD (MTBA) et le Simplify Short Term Treasury Futures Strategy ETF (TUA).
Simplify Asset Management hat den Simplify National Muni Bond ETF (NMB) eingeführt, einen aktiv verwalteten kommunalen Anleihen-ETF. Der Fonds, der von Foundation Credit beraten wird, hat zum Ziel, attraktive steuerfreie Einkünfte durch kommunale Anleihencoupons zu erzielen und gleichzeitig besteuerbare Gewinne durch den Handel mit unterbewerteten kommunalen Wertpapieren zu generieren. NMB umfasst auch eine risikomanagte, einkommensgenerierende Optionsverkaufsstrategie über verschiedene Instrumente hinweg.
Der ETF kombiniert drei potenzielle Einkommensquellen: die Renditen von kommunalen Anleihen, opportunistische Investitionen in übersehene Wertpapiere und Einkommen aus der Optionsschrift. Dieser Ansatz zielt darauf ab, nach Steuern höhere Renditen als nationale kommunale Anleiheindizes zu liefern. NMB reiht sich in das wachsende Portfolio der festverzinslichen Lösungen von Simplify ein, darunter der 1,2 Milliarden USD große Simplify MBS ETF (MTBA) und der Simplify Short Term Treasury Futures Strategy ETF (TUA).
- Launch of a new actively managed municipal bond ETF (NMB)
- Potential for higher after-tax yields compared to national municipal bond indexes
- Combination of tax-free and taxable income sources
- Diversified strategy with three potential return sources
- Sub-advised by experienced credit investment firm Foundation Credit
- None.
Insights
The launch of Simplify's National Muni Bond ETF (NMB) represents an innovative approach in the municipal bond market. By combining three potential return sources - municipal bond coupons, active trading and option-writing income - NMB aims to enhance yields in a typically low-yield environment. This strategy could potentially outperform traditional passive muni bond indices, especially in terms of after-tax yields.
The fund's active management by Foundation Credit, with over a decade of institutional experience, adds credibility. However, investors should note that active management often comes with higher expense ratios. The inclusion of an options strategy, while potentially boosting returns, also introduces additional complexity and risk. It's important for investors to understand these nuances before investing.
With Simplify's AUM approaching
The Simplify National Muni Bond ETF (NMB) presents an intriguing tax strategy for investors. By combining tax-free income from municipal bond coupons with taxable gains from trading and options, NMB offers a unique tax-efficient structure. This hybrid approach could potentially yield higher after-tax returns compared to traditional muni bond funds.
However, investors need to be aware of the tax implications. While muni bond interest is typically tax-free at the federal level, the gains from trading and options will be subject to capital gains tax. The tax efficiency of this strategy will depend on individual tax situations and the fund's performance in each income stream.
It's worth noting that active trading within the fund could lead to more frequent capital gains distributions, which may impact the overall tax efficiency for investors holding the ETF in taxable accounts. Investors should consult with a tax professional to understand how NMB fits into their specific tax strategy.
The Simplify National Muni Bond ETF (NMB) offers a novel approach to municipal bond investing that could enhance portfolio diversification. By incorporating active management and options strategies, NMB aims to address the yield challenge in the current low-interest-rate environment.
The multi-faceted strategy of NMB - combining traditional muni bond yields, active trading and options income - could potentially provide more stable returns across different market conditions. This approach may be particularly attractive in volatile markets or when interest rates are rising, scenarios that often challenge traditional bond funds.
However, the complexity of this strategy also introduces new risks. The success of NMB will heavily depend on the managers' skill in both bond selection and options trading. Investors should carefully consider how this product fits into their overall portfolio strategy and risk tolerance. While the potential for enhanced yields is appealing, it's important to weigh this against the added complexity and potential for increased volatility.
Actively managed fund combines three sources of potential return: muni bond coupons, active muni bond trading & option-writing income
NMB is sub-advised by Foundation Credit, a specialist credit investment firm that has more than a decade of experience managing portfolios for institutional investors. This new fund employs an actively managed municipal bond strategy, with the goal of achieving attractive (tax-free) income through municipal bond coupons while simultaneously generating (taxable) gains by opportunistically trading undervalued municipal securities. Additionally, NMB incorporates a risk-managed, income-generating options selling strategy that involves selling option spreads across a variety of instruments, including equity, fixed income, and commodity indices and ETFs.
“Rather than simply allowing muni investors to clip coupons, NMB is built to combine three sources of potential return: the yields from the muni bonds themselves, opportunistic investments in securities overlooked by the traditional passive indices, and the income generated by the option-writing strategy,” said David Berns, CIO and cofounder of Simplify. “It’s a capital efficient means for investors to stack a number of different return sources without requiring additional investment outlay.”
“This combination of taxable and tax-free income sources can result in after-tax yields that far exceed those of national municipal bond indexes. NMB is a powerful new tool for investors and we’re very pleased to be bringing it to market,” added David Berns.
NMB is the latest addition to Simplify’s lineup of fixed income solutions, headlined by the
For more information on NMB, please visit https://www.simplify.us/etfs/nmb-simplify-national-muni-bond-etf
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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.
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. Distributions are not guaranteed.
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.
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. Typically, a rise in interest rates causes a decline in the value of fixed income securities owned by the Fund. In general, the market price of fixed income securities with longer maturities will increase or decrease more in response to changes in interest rates than shorter-term securities.
Any tax or legal information provided is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation. Neither the Fund nor any of its representatives may give legal or tax advice.
Simplify ETFs are distributed by Foreside Financial Services, LLC. Foreside and Simplify are not related.
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MEDIA:
Chris Sullivan
Craft & Capital
chris@craftandcapital.com
Source: Simplify Asset Management
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