Simplify Asset Management has launched the Simplify Hedged Equity ETF (HEQT) in the US.
The firm writes that HEQT seeks capital appreciation by fully investing in a low-cost S&P 500 ETF while simultaneously investing in a series of put-spread collars designed to help reduce volatility.
By deploying a ladder of collars that expire over three sequential months, the fund seeks to create a hedged equity approach with more robust opportunities for improving rebalancing luck. Each collar consists of an approximately 5 per cent OTM to 20 per cent OTM put-spread, funded by selling a call. The firm writes that HEQT is the first equity ETF to utilise this laddered approach to put-spread collars.
“Many investors struggle to stay the course with their equity investments due to volatility, but by creating a lower volatility equity exposure, those who are more risk averse can stay invested and improve their opportunities to participate in market upside,” says David Berns, Ph.D., CIO and Co-Founder with Simplify. “At the same time, with bond yields near all-time lows, investors are searching for alternatives to traditional low vol investments. The possibility of reduced volatility offered by HEQT creates a powerful alternative for investors, and we’re very pleased to be bringing this fund to market.”
HEQT is the latest addition to a Simplify ETF family that recently crossed the USD825 million mark in assets, as of October 26th. Among the innovative and first-to-market ETF solutions designed and launched by Simplify in recent months include funds focused on interest rate hedging (PFIX), volatility income (SVOL) and equity plus bitcoin exposure, via GBTC (SPBC). Last month, Simplify also unveiled the Simplify Health Care ETF (PINK), an actively managed ETF focused on leading companies in biotech and healthcare which is also the first ETF committed to donating all of its net profits from managing the fund to Susan G. Komen®, the world’s leading breast cancer organisation.