Newfound and Simplify Partner for Structured Alpha ETF Model Portfolios

Simplify Asset Management and Newfound Research have partnered to develop a suite of four ETF model portfolios.

Newfound today launched the structural alpha series of ETF model portfolios comprising Simplify’s innovative family of ETFs. The launch provides investors the opportunity to invest in a traditional portfolio that uses capital efficiency to layer on diversification and tail risk protection.

The initial suite includes conservative growth, moderate growth, and growth offerings aimed to provide investors with a modern approach to navigating modern markets.

Each portfolio targets traditional static asset allocation profiles — 20/80, 40/60, 60/40, and 80/20 — with the idea that the new offerings are easy drop-in replacements for clients who have already been profiled for those asset allocation mixes, Corey Hoffstein, co-founder and CIO of Newfound, said.

Access to the models is free, allowing advisors to use the various models in a scalable, cost-effective way.

“They are all-ETF models that we are making available to advisors and model manager platforms with zero strategist fee, even though they’re being managed by a third party strategist,” Hoffstein said. “So it is Newfound as an asset manager using an open architecture, ETF selection process.”

Using ETFs as portfolio building blocks provides cost and tax efficiency, two factors that affect long-term return generation.

The new suite optimizes the changing investment landscape, addressing the shifting problems facing investors, and utilizing the new types of ETFs that are now available on the market. 

“What we wanted to do was bring a suite of strategies to the market that tried to generate outperformance not by picking better stocks or timing the market, but by trying to structurally enhance the composition of the portfolio through things like capital efficiency and convexity that are achieved by some of the new ETFs that have come to market,” Hoffstein said.

Within each portfolio, hedges are put in place for equity, rate, and volatility markets, increasing portfolio resiliency and allowing for investing from a position of strength during turbulent markets, including an inflationary environment. 

Newfound has stacked on top a managed futures position, which has historically done well during inflationary as well as deflationary shocks, according to Hoffstein.

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