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Simplify Launches Currency Strategy ETF (FOXY), Providing Actively Managed Solution for Implementing Exposure to Both Foreign Exchange Carry and Mean Reversion Return Premia
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FOXY Is designed to provide returns independent of movements in stocks and bonds, applies a “carry” strategy to Emerging Market currencies and a mean reversion strategy to G10 currencies.
February 04, 2025
NEW YORK – Simplify Asset Management (“Simplify”), a leading provider of Exchange Traded Funds (“ETFs”), today introduced the Simplify Currency Strategy ETF (FOXY), an actively managed fund that takes long and short positions in foreign currencies, providing investors and advisors with a powerful portfolio building block designed to provide returns with little correlation to equities or bonds.
FOXY’s approach is built around two primary strategies.
First is an Emerging Markets carry strategy that utilizes eight Emerging Market currency pairs, with each currency paired against the U.S. dollar. The four currencies with the highest interest rates will be held “long,” while the four currencies with the lowest interest rates will be shorted. The differences in yield, or “carry,” combined with the changes in the currency levels become the fund’s profit.
The second strategy focuses on G10 currencies, utilizing six different currency pairs. The three currencies with the strongest yield momentum increase will be held “long” while the three currencies with the lowest yield momentum increase will be shorted. This strategy aims to benefit from the tendency for movements in G10 currencies to “mean-revert,” i.e. the tendency for these currencies to revert back to prior levels over time. The lower correlations between the G10 and Emerging Market strategies also serve to reduce risk.
“Historically, currency-focused ETFs have been passive vehicles and have largely focused on the movements of a single currency in relation to the U.S. dollar. But sophisticated institutions, hedge funds, and other large investors have long known the powerful role that an active carry strategy can play in managing currency exposure and tapping into sources for uncorrelated returns,” said David Berns, CIO and Co-Founder of Simplify. “With FOXY, investors and advisors now have a single-ticker solution to implement currency carry trades in their own portfolios and they can do so via the liquid, transparent ETF structure.”
“Where the U.S. dollar is headed in the months and years to come is anyone’s guess, and the same goes for the directions of those major currencies in both the developed and emerging markets,” said Berns. “But that type of volatility, actively managed, could be a source of opportunity for investors. We’re thrilled to be launching FOXY and further expanding our suite of active ETF offerings and we look forward to educating the marketplace about the role currency exposure can play in building a diversified, robust portfolio.”
ABOUT SIMPLIFY ASSET MANAGEMENT INC
Simplify Asset Management Inc. is a Registered Investment Adviser founded in 2020 to help advisors tackle the most pressing portfolio challenges with an innovative set of options-based strategies. By accounting for real-world investor needs and market behavior, along with the non-linear power of options, our strategies allow for the tailored portfolio outcomes for which clients are looking.
FOXY’s approach is built around two primary strategies.
First is an Emerging Markets carry strategy that utilizes eight Emerging Market currency pairs, with each currency paired against the U.S. dollar. The four currencies with the highest interest rates will be held “long,” while the four currencies with the lowest interest rates will be shorted. The differences in yield, or “carry,” combined with the changes in the currency levels become the fund’s profit.
The second strategy focuses on G10 currencies, utilizing six different currency pairs. The three currencies with the strongest yield momentum increase will be held “long” while the three currencies with the lowest yield momentum increase will be shorted. This strategy aims to benefit from the tendency for movements in G10 currencies to “mean-revert,” i.e. the tendency for these currencies to revert back to prior levels over time. The lower correlations between the G10 and Emerging Market strategies also serve to reduce risk.
“Historically, currency-focused ETFs have been passive vehicles and have largely focused on the movements of a single currency in relation to the U.S. dollar. But sophisticated institutions, hedge funds, and other large investors have long known the powerful role that an active carry strategy can play in managing currency exposure and tapping into sources for uncorrelated returns,” said David Berns, CIO and Co-Founder of Simplify. “With FOXY, investors and advisors now have a single-ticker solution to implement currency carry trades in their own portfolios and they can do so via the liquid, transparent ETF structure.”
“Where the U.S. dollar is headed in the months and years to come is anyone’s guess, and the same goes for the directions of those major currencies in both the developed and emerging markets,” said Berns. “But that type of volatility, actively managed, could be a source of opportunity for investors. We’re thrilled to be launching FOXY and further expanding our suite of active ETF offerings and we look forward to educating the marketplace about the role currency exposure can play in building a diversified, robust portfolio.”
ABOUT SIMPLIFY ASSET MANAGEMENT INC
Simplify Asset Management Inc. is a Registered Investment Adviser founded in 2020 to help advisors tackle the most pressing portfolio challenges with an innovative set of options-based strategies. By accounting for real-world investor needs and market behavior, along with the non-linear power of options, our strategies allow for the tailored portfolio outcomes for which clients are looking.
