The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Simplify High Yield PLUS Credit Hdg ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's management team is about as experienced as others, but due to other weaknesses, the strategy earns a Below Average People Pillar. The strategy gets an Average Process Pillar rating.  The strategy's parent firm has some investor-friendly attributes, like high portfolio manager retention, but it is held back by an unfavorable lineup success ratio. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

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Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. Simplify High Yield PLUS Credit Hdg ETF earns an Average Process Pillar rating.    The main driver of the rating is the firm's five-year retention rate of 100% over the period. A low expense ratio also contributes to the process, with costs ranking in its category's second-cheapest quintile. A higher expense ratio reduces net returns, so being affordable gives this fund a significant advantage. Lastly, the process is limited by the experience of the management team, which averages five years at this fund.

 Compared with other funds in the High Yield Bond Morningstar Category, this fund consistently holds a significantly larger cash position over the past few years. But in terms of long-term interest-rate sensitivity, it does not have a portfolio bias and hews closely to peers. 

 This strategy has a modest 5.2% 12-month yield, lower than its average peers' 6.4%. While a lower yield may deliver less income, it also tends to indicate lower credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been lower than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated B.

Average

Process

Simplify High Yield PLUS Credit Hdg ETF earns a Below Average People Pillar rating. The team is supported by the firm's five-year retention rate of 100%. However, the rating is held back by the experience of the management team, which averages five years at this fund. The turnover of its management team also holds the rating back. The fund last saw a manager change three months ago.


Paul Kim brings nine years of listed portfolio management experience to the team. The average Morningstar Rating of the strategies they currently manage is 1.8 stars, indicating that their risk-adjusted returns have underperformed the category average. The team is small but adequately equipped, with two other supporting listed managers. Together, the three boast five years of average listed portfolio management experience.

Below Average

People

In a competitive industry, Simplify Asset Management doesn't differentiate itself enough, leading to an Average Parent Pillar rating. Portfolio management turnover has been minimal at the firm since the firm's inception. Long-term stability signals a strong investment culture. The firm's lineup has had discouraging initial results. Its three-year risk-adjusted success ratio is 0%, indicating that of the strategies with a three-year track record, 0% have both survived and beaten their respective category median on a risk-adjusted basis. A low success ratio not only indicates weak performance but also provides insight into a firm’s discipline around investment strategy and product development. With an average three-year Morningstar Rating of 1.8 stars, the risk-adjusted performance of Simplify Asset Management's open-end and exchange-traded funds falls short of competitors.

Parent

Simplify High Yield PLUS Credit Hedge ETF

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