Simplify U.S. Equity PLUS Bitcoin ETF
SUMMARY
U.S. equity and some Bitcoin exposure: Invests at least 80% of fund assets in U.S. stocks, and up to 15% in the Grayscale Bitcoin Trust. However, can liquidate all into cash for defensive positioning.
ANALYSIS
This is either and "Equity + Bitcoin" ETF or a "Bitcoin Lite" ETF as it has only a maximum of 15% exposure to Bitcoin via a wholly-owned subsidiary. This strategy takes advantage of the fact that ETFs can hold up to 20% of their AUM in non-listed assets.
This is a creative approach to providing US investors exposure to Bitcoin returns by adding a splash of it to the portfolio rather than as a standalone fund. No standalone fund has yet been approved by the SEC so this is an attempt to satiate the high demand for Bitcoin exposure before a full-fledged fund can be launched.
Questions that come to mind:
1. What will happen to this fund once a Bitcoin ETF is finally launched? Will assets be sticky, or will investors look elsewhere give that this fund's exposure is entirely tied up with one subsidiary?
2. How does this divergent fund from Simplify's lineup and Convexity / Disruption mantra help its distribution shape the company's narrative?
3. How likely is to be approved by the SEC?
Bottom line is that this is a creative partial solution to a pressing industry problem of investing in Bitcoin in an ETF or any national exchange.
Ticker: SPBC
Exchange: NASDAQ
Expense ratio: 0.00%
Original filing date: March 9, 2021
Effective date: May 24, 2021
Listing Date: TBD
CUSIP: TBD
Active: Yes
Index / Benchmark: Not Applicable
Investment Objective:
seeks long-term capital
appreciation.
Investment Strategy: Invests in US stocks and up to 15% in a Bitcoin Trust
Constituents:
Adviser: Simplify Asset
Management Inc
Sub-Adviser: 0
Adminstrator: Bank of New York Mellon
Fund accountant: Bank of New York Mellon
Custodian: Bank of New York Mellon
Distributor: Foreside Financial Services, LLC
Legal counsel: Thompson Hine LLP
External accounting: TBD
https://www.sec.gov/Archives/edgar/data/1810747/000182912621001372/0001829126-21-001372-index.htm
MORE ETF HEARSAY
Under normal circumstances, the Fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. companies and cryptocurrencies (indirectly and solely through Grayscale® Bitcoin Trust).
The Fund invests in equity securities of U.S. companies through (i) exchange-traded futures contracts, (ii) equity securities of U.S. companies, and (iii) ETFs that primarily invest in the equity securities of U.S. companies. The Fund defines equity securities as common stock, preferred stock, or futures on common or preferred stock. The Fund defines U.S. companies as those organized in the U.S.; having a class of securities whose principal securities market is in the U.S.; or derives 50% or more of its total revenues or earnings from goods produced, sales made, or services provided in the U.S.; or maintains 50% or more of its employees, assets, investments, operations, or other business activity in the U.S. The Fund invests in companies without restriction as to capitalization.
Bitcoin Strategy
The Fund invests up to 15% of its total assets in cryptocurrencies, indirectly and solely through Grayscale® Bitcoin Trust. The Fund expects to gain exposure to cryptocurrencies indirectly by investing up to 15% of its total assets (measured at the time of investment) in a wholly-owned and controlled subsidiary, which is designed to enhance the ability of the Fund to obtain exposure to cryptocurrencies consistent with the limits of the U.S. federal tax law requirements applicable to regulated investment companies.
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