This Week in ETFs: Simplify Adds 2 ‘Intangible Capital’ Funds

The past week was exceptionally quiet for the ETF space, with almost no activity. Simplify Asset Management rolled out the only new ETF to launch during the week.

The Simplify NEXT Intangible Core Index ETF (NXTI) and the Simplify NEXT Intangible Value Index ETF (NXTV) both track indexes that select their holdings based on intangible assets. Intangible assets, according to a press release from Simplify, can include things like patents, brand value, and research and development activities.

According to Simplify’s CIO David Berns, the influence of tangible assets has been declining over the long term when it comes to equity valuations.

“Our belief — confirmed by academic research — is that the most successful corporations have exhibited relatively ‘asset-light’ characteristics, with much higher allocations to intangible capital than their peers,” he noted.

Both funds’ indexes start out selecting their holdings from the largest 2,000 U.S. companies. NXTI selects 200 stocks based on their ratio of intangible capital to book assets and uses the metric to weight them as well. Meanwhile, NXTV takes a value angle on the intangible capital concept by using the market capitalization to intangible-adjusted book value ratio to select and weight its portfolio of 200 securities.

Both funds list on the Cboe BZX Exchange and have expense ratios of 0.25%.

Beyond New ETFs

Only one new closure was announced during the week: The U.S. Value ETF (USVT) will see its last day of trading on May 14. The fund launched in September 2021 and has less than $10 million in assets under management. Year to date, 77 U.S.-listed ETFs have closed, with more set to complete later in the year.

On Thursday, the R3 Global Dividend Growth ETF changed its name to the Copper Place Global Dividend Growth ETF (GDVD). The fund, which launched in 2022, has roughly $25 million in assets under management.

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