Simplify ETF Debut Fund focused on Global Currency Markets
Simplify the currency strategy ETF (Foxy) The trading began on February 4th by a proactively managed fund built around two strategies focusing on the currency market.
The first component is an emerging market carry strategy using eight emerging market currency pairs, each of which is paired with the US dollar.
The four currencies with the highest interest rates will be held for a long time, with the four currencies with the lowest interest rates being shortened. The difference in yields, coupled with changes in currency levels, results in the fund’s profits.
The second strategy focuses on the G10 currency, using six different currency pairs.
The three currencies with the strongest yield momentum increase will be held for a long time, while the three currencies with the lowest yield momentum increase will be shortened.
This strategy aims to benefit from the trend of G10 currency movements returning to previous levels over time.
“This fund is not a currency directional bet. It’s a long basket, and the equal amounts are short in another basket,” says Chris Goetter, portfolio manager and managing director. Simplifysaid.
Getter emphasized that Foxy, which has an expense ratio of 75 basis points, is “dollar neutral.” So, while it’s not a play on the relative strength or weakness of the US dollar, strategies could benefit from increased currency volatility.
Kenmiller, who simplified portfolio managers and managing directors, said the launch of the ETF is not timed for what is currently unfolding on geopolitical landscapes, including new policies and proposals under the Trump administration. .
“But at this point, the timing is pleasant,” he said. “The current president is willing to proceed with fairly aggressive measures to ensure that certain countries play fairly.”
“This is a very unique strategy within the currency ETF space and we don’t see much innovation or interest,” said Sumit Roy, senior ETF analyst at ETF.com.
“That being said, the success of this fund will depend on how well it works,” he added. “It uses two relatively simple strategies that sound attractive, but the evidence is in the pudding, as it is notoriously difficult to navigate the currency market.”
Getter and Miller are both veterans of these unique markets. Before joining Simplify, Miller was based in Newport Beach, California. Pimco Investment Management For 22 years he managed the currency allocation of $100 billion in hedge equity and hedged bond portfolios.
Getter spent 10 years at Pimco before joining Smarify.