Summary
CTA Chart
Managed futures: working when other things are not?
Andrew Beer, Founder & Managing Member at Dynamic Beta Investments and Nate Geraci, President of Novadius Wealth Management discuss how this previsouly niche part of the market is emerging as a force against volatility.
The Quants Are Gone From CTA (Downgrade)
The Simplify Managed Futures Strategy ETF (CTA) has undergone a major strategy and management shift, now managed in-house by Simplify. CTA has transitioned from a diversified, multi-asset managed futures approach to a hyperfocused, leveraged long exposure in energy commodities, with minimal short positions. The abrupt strategy change and lack of transparency have led me to downgrade CTA from strong buy to hold, citing uncertainty and risk to portfolio stability.
CTA: Managed Futures Strategy For Alternative Asset Exposure
The Simplify Managed Futures Strategy ETF offers diversified, actively managed futures exposure with low equity correlation, suitable for hedging across market cycles. CTA provides monthly distributions and 1099 tax reporting, though distribution rates have declined and vary due to market volatility. With a 0.75% expense ratio and $1.63B in assets, CTA is best suited for long-term, alternative sleeve allocations rather than active trading.
Simplify Managed Futures Strategy ETF Investors
| Name | Quantity | Cost | Value | Profit ($) | Gain (%) |
|---|---|---|---|---|---|
| TJD Thomas John Drogan PR Inc.IPAL SECURITIES Inc. | 62,185 | $1.66M | $1.83M | $174,737.4 | 10.55% |
| DI David Izzi Brown, LISLE/CUMMINGS Inc. | 63 | $1,903.63 | $1,899.45 | -$4.18 | -0.22% |
| BZ Brandon Zatopek Commonwealth Equity Services LLC | 33,869 | $878,550 | $1.01M | $130,746.2 | 14.88% |
| JD Jim Dushek HARBOUR INVESTMENTS Inc. | 605 | $16,065.42 | $18,029 | $1,963.58 | 12.22% |
| NA Nizar Araji National Bank Of Canada /FI/ | 22,717 | $593,234.94 | $668,788.48 | $75,553.54 | 12.74% |
Simplify Managed Futures Strategy ETF (CTA) FAQ
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Simplify Managed Futures Strategy ETF Profile
| ARCA Exchange | US Country |
Overview
The fund operates by diversifying its investments across multiple asset classes, including equity, U.S. Treasury, commodity, and foreign exchange futures contracts, collectively known as "Futures Contracts". It aims to mitigate risks and maximize returns under normal market conditions by strategically distributing its investments. Rather than investing directly in commodity futures contracts, the fund employs a unique approach by channeling up to 25% of its assets into a wholly-owned subsidiary based in the Cayman Islands, known as the “Subsidiary”. This methodology facilitates exposure to desired investments while adhering to regulatory and operational efficiencies.
Products and Services
The fund offers investment opportunities in diversified asset classes through carefully selected products and services:
- Equity Futures Contracts - These contracts allow investors to speculate on the future price of equity or stock market indices. By investing in equity futures, the fund aims to capitalize on the anticipated movements in the equity markets without the need to directly own the underlying stocks or indices.
- U.S. Treasury Futures Contracts - Investments in U.S. Treasury futures provide exposure to the movements in the U.S. government bond market. This offers a way to hedge against interest rate fluctuations and gain from the price movements of U.S. Treasuries, enhancing the fund’s risk management strategy.
- Commodity Futures Contracts - While the fund typically does not invest directly in commodity futures contracts, it derives exposure to commodities through its subsidiary. This strategy allows for participation in the commodities market, including but not limited to, energy, precious metals, and agricultural products, without direct investment in physical commodities.
- Foreign Exchange Futures Contracts - These contracts provide exposure to foreign exchange rate movements and offer a way to speculate on changes in currency values. Investing in foreign exchange futures helps in diversifying the portfolio and managing currency risk, contributing to the global investment strategy of the fund.
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