Market Overview

Simplify ETFs Continues Torrid Launch Pace With 4 Disruptive Thematic Funds (One Heavy On Tesla)

Simplify ETFs Continues Torrid Launch Pace With 4 Disruptive Thematic Funds One Heavy On Tesla

The universe of thematic exchange-traded funds continues expanding as upstart issuer Simply Asset Management extends its brisk pace of product launches with a quartet of rookie funds focusing on various disruptive technologies.

What Happened: Simplify launched its initial trio of ETFs featuring options overlay strategies in September followed by a pair of similar products last month. Now it's getting thematic with cloud/cybersecurity, fintech, pop culture and robocar ETFs. The launches could prove well-timed because, as 2020 proved, ETF users are embracing thematic and disruptive funds and returns are justifying that faith.

“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,” according to Simplify. “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.”

The Simplify Volt Robocar Disruption and Tech ETF (NYSE: VCAR) is one of the new Simplify ETFs. Investors may love VCAR for a simple reason: It's heavy on Tesla (NASDAQ: TSLA). The new ETF allocates almost 15% of its weight to that stock with a 10% options overlay. The Invesco QQQ (NASDAQ: QQQ) and the Invesco NASDAQ Next Gen 100 ETF (NASDAQ: QQQJ) combine for over 69% of VCAR's equity exposure.

Why It's Important: Fintech is one of the most compelling disruptive investment niches, but there are just a handful of ETFs addressing it. Add one more in the form of the Simplify Volt Fintech Disruption ETF (NYSE:VFIN).

That new ETF is heavy on Lemonade (NASDAQ: LMND) and Square (NYSE: SQ) as each fintech name represents about 20% of VFIN's weight, each with a 5% options overlay. Shopify (NYSE: SHOP) and PayPal (NASDAQ: PYPL) are among the other familiar names in the new ETF.

A Simplify fund that could appeal to younger investors is the Simplify Volt Pop Culture Disruption (NYSE:VPOP). VPOP is a new media concept, but it's not heavy on old guard social media names. Rather, Spotify (NYSE: SPOT) and Snap (NYSE: SNAP) are the fund's two largest holdings and each features an options component as is the case with the top holdings in the other ETFs mentioned here.

What's Next: Although there are dedicated cloud computing and cybersecurity ETFs on the market, the new Simplify Volt Cloud and Cybersecurity Disruption ETF (NYSE:VCLO) is unique in that it marries both disruptive technologies under the umbrella of a single ETF.

CrowdStrike (NASDAQ: CRWD) and Snowflake (NYSE: SNOW) combine for 42% of VCLO with each of those name garnering 2.5% call option positions.


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