On Monday, Paul Kim and David M. Berns, Ph.D., co-founders of Simplify Asset Management have announced the launch of four new bleeding-edge ETFs in the following areas: financial technology, pop culture and media, robotic cars, and clean energy along with cloud and cybersecurity.
These ETFs are the Simplify Volt RoboCar Disruption ETF (VCAR), the Simplify Volt Fintech Disruption ETF (VFIN), the Simplify Volt Pop Culture Disruption ETF (VPOP), and the Simplify Volt Cloud and Cybersecurity Disruption ETF (VCLO). The funds will take concentrated positions in disruptive technology sector leaders while utilizing robust options strategies to enhance the upside and limit the downside.
The pace of technological disruption is faster than ever. Nimbler, tech-savvy companies are pulling ahead of slower peers in an increasingly winner-take-all market. The best firms are not just disrupting existing industries but creating brand-new ones. Firms able to deliver growth in a slow-growth world command premium valuation.
“Increased globalization, the ubiquity of broadband, greater access to capital, and the unprecedented pace of technological disruption create ‘winner take all’ dynamics in industries,” explained Kim, chief executive officer. “Winning firms are growing faster and being rewarded with rich valuations. Thematic ETFs have benefited from investor demand for greater exposure to the technology-driven winners and industries.”
The Right Concentration
Dr. Berns, Chief Investment Officer, added, “At Simplify we are focused on first principles investing. Thematic portfolios are essentially trying to concentrate on likely winners. We try to identify firms that have important technological or cultural edges and provide meaningful concentration to their stock price. We combine concentrated stock exposure with call options to add ‘convexity.’ But because of the inherent volatility of growth stocks we also incorporate risk management, diversification, and downside hedges as a way to smooth out the experience of concentrated portfolios.”
“Our thematic ETFs are designed to be an attractive alternative to watered-down thematic ETFs that try to buy every company in a particular theme. We believe in concentration for upside potential,” added Kim. “We also believe that concentrated, professionally managed ETFs are an attractive alternative to single stock or options for many investors.”
Prior to co-founding Simplify in September 2020, Kim was a portfolio manager and managing director at Principal Global Investors from 2015 to 2020, where he founded and led Principal’s ETF business segment. Kim has a bachelor’s degree from Dartmouth and a master’s degree in business from the Wharton School at the University of Pennsylvania.
Prior to Simplify, Dr. Berns founded Portfolio Designer, LLC, a company that specializes in portfolio design, and from 2018 to 2019 he was a managing director at Nasdaq Dorsey Wright. Prior to Nasdaq Dorsey Wright, he founded and developed a company that specializes in proprietary trading. Dr. Berns is the author of Modern Asset Allocation for Wealth Management, published by Wiley Finance, and holds a Ph.D. in physics from the Massachusetts Institute of Technology in the field of quantum computation.
Details for the ETFs are now live at simplify.us/etfs.
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