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 VCAR is one of the new Simplify ETFs. Investors may love VCAR for a simple reason: It's heavy on Tesla TSLA. The new ETF allocates almost 15% of its weight to that stock with a 10% options overlay. The Invesco QQQ QQQ and the Invesco NASDAQ Next Gen 100 ETF 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 VFIN.
That new ETF is heavy on Lemonade LMND and Square SQ as each fintech name represents about 20% of VFIN's weight, each with a 5% options overlay. Shopify SHOP and PayPal 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 VPOP. VPOP is a new media concept, but it's not heavy on old guard social media names. Rather, Spotify SPOT and Snap 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 VCLO is unique in that it marries both disruptive technologies under the umbrella of a single ETF.
CrowdStrike CRWD and Snowflake SNOW combine for 42% of VCLO with each of those name garnering 2.5% call option positions.
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