Simplify Launches Single-Fund Solutions for Investors Looking to Add Capital Efficient Exposure to Gold PLUS Income & U.S. Small-Caps PLUS Income

Rhea-AI Summary

Simplify Asset Management has launched two new ETFs: the Simplify Gold Strategy PLUS Income ETF (YGLD) and Simplify US Small Cap PLUS Income ETF (SCY). YGLD aims to provide 150% exposure to gold through futures contracts with quarterly rebalancing, while SCY targets 100% exposure to U.S. small-cap equities. Both funds feature income-generating options overlay strategies focused on selling put spreads. The funds are designed to provide capital efficient exposure while generating monthly income, with SCY notably offering uncapped upside potential unlike similar market alternatives.

Positive

• SCY offers uncapped upside potential in small-cap equity exposure, differentiating it from competitors
• Monthly income generation through options overlay strategy
• No K-1 tax form requirement for investors

Negative

• Leveraged exposure in YGLD (150%) increases potential risk
• Options overlay strategy may introduce additional complexity and risk

Insights

Financial Analyst

The launch of YGLD and SCY represents an innovative approach to portfolio construction, combining leverage and options strategies in a unique way. YGLD's 150% gold exposure with quarterly rebalancing addresses the common volatility drag issue seen in daily-rebalanced leveraged products. Meanwhile, SCY's uncapped small-cap exposure differentiates it from existing covered call ETFs in the space.

The key innovation here is the put spread writing strategy for income generation, which can potentially provide more stable returns compared to traditional covered call strategies. However, investors should note that leveraged exposure and options overlays add complexity and potential risks. The quarterly rebalancing in YGLD may lead to tracking differences during periods of high volatility in gold prices.

Simplify Gold Strategy PLUS Income ETF (YGLD) provides leveraged exposure to gold with an income-generating options overlay while the Simplify US Small Cap PLUS Income ETF (SCY) targets 100% exposure to U.S. small-caps with an options overlay

NEW YORK--(BUSINESS WIRE)-- Simplify Asset Management (“Simplify”), a leading provider of Exchange Traded Funds (“ETFs”), today added two unique new funds to its suite of income-oriented strategies with the launch of the Simplify Gold Strategy PLUS Income ETF (YGLD) and Simplify US Small Cap PLUS Income ETF (SCY).

Designed for investors seeking to balance growth, income, and capital efficiency, these funds blend enhanced asset exposure with monthly income-generating potential through their proprietary options overlay strategies.

“At Simplify, one of our core missions is designing tools that allow investors and advisors to build the most capital efficient portfolios possible, and it’s precisely that thinking that drove the creation of YGLD and SCY,” said David Berns, Chief Investment Officer and Cofounder of Simplify. “Both gold and small-cap equities have a role to play in a diversified portfolio and now, through these new ETFs, they can play that role while simultaneously providing an enhanced income stream. We’re very excited to be bringing these funds to market at a time when the search for enhanced yield has perhaps never been more front and center.”

YGLD is an actively managed ETF that aims to provide a 150% exposure to gold through the use of gold futures contracts. The Fund will rebalance to that 150% exposure level on a quarterly basis, a schedule designed to reduce the volatility drag associated with leveraged approaches that rebalance daily. The options overlay for YGLD will primarily be involved in selling put spreads on a variety of underlying instruments and may add to the Fund’s total return in addition to providing attractive monthly income.

SCY is also actively managed and designed to provide 100% exposure to U.S. small-cap equities while also generating enhanced income via an options overlay focused on writing short-term spreads on a variety of underlying assets.

“The capital efficient approach underpinning SCY provides a monthly income stream without capping upside gains,” continued Berns. “This is a key contrast to other U.S. small-cap equity + income strategies currently on the market, which all put a cap on potential gains, a significant drawback for what is, at its heart, a growth exposure.”

Berns also noted that neither fund provides investors with a K-1 tax form.

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.

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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.

YGLD Risk: Investing involves risk; Principal loss is possible. The price of gold may be volatile and gold futures contracts may be highly sensitive to the price of gold. The Fund’s use of gold futures involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Investments in futures involve leverage, which means a small percentage of assets invested in futures can have a disproportionately large impact on the Fund. This risk could cause the Fund to lose more than the principal amount invested.

SCY Risk: Investing involves risk; Principal loss is possible. The earnings and prospects of small sized companies are more volatile than larger companies and may experience higher failure rates than larger companies. Options are a derivative investment. 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.

Simplify ETFs are distributed by Foreside Financial Services, LLC. Foreside and Simplify are not related.

© 2024 Simplify ETFs. All rights reserved.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241203272506/en/

MEDIA CONTACT:

Chris Sullivan

Craft & Capital

chris@craftandcapital.com

Source: Simplify Asset Management

FAQ

What is the investment strategy of Simplify US Small Cap PLUS Income ETF (SCY)?

SCY provides 100% exposure to U.S. small-cap equities while generating enhanced income through an options overlay strategy focused on writing short-term spreads, offering uncapped upside potential.

How does SCY differ from other small-cap equity income ETFs?

Unlike other small-cap equity income strategies, SCY does not cap potential gains while still providing monthly income through its options overlay strategy.

What type of tax documentation does SCY provide?

SCY does not provide investors with a K-1 tax form, simplifying tax reporting requirements.