The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Simplify US Equity PLUS Upsd Cnvxty ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the second-cheapest 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 earns an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent firm has some investor-friendly attributes, like modest portfolio manager turnover, but it is held back by relatively short-tenured portfolio managers. As a result, the firm gets an Average Parent Pillar rating.

Analyst Rating

iShares Core S&P 500 ETF

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Simplify US Equity PLUS Upsd Cnvxty ETF earns an Average Process Pillar rating. 

The largest contributor to the rating is the firm's five-year retention rate of 100% over the period. Low costs across its parent firm's funds, whose fees, on average, rank in the second-cheapest quintile of their respective category, also influence the rating. The pattern of low expenses at the firm indicates that it is focused on delivering strong results for investors. Lastly, the process is limited by the experience of the management team, which averages six years at this fund.

 This strategy skews toward smaller, higher-growth companies than its average peer in the Large Blend Morningstar Category. Looking at additional factor exposure, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. This is a higher-risk, higher-reward approach. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, this strategy has taken on exposure to high-momentum stocks in these years. Momentum is based on the premise that stocks that have recently outperformed will continue to outperform, and those that have underperformed will stay behind. In this month, the strategy also had more exposure to the Momentum factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in technology by 2.6 percentage points in terms of assets compared with the category average, and its communication services allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and financial services; however, the allocations are similar to the category. The strategy has only reported a handful of holdings, and is in a category where the typical fund has 49.5% of assets within the top 10 holdings. And finally, in terms of portfolio turnover, this fund trades less regularly than the typical peer in its category, which may result in a lower cost to investors.

Average

Process

Simplify US Equity PLUS Upsd Cnvxty ETF earns a Below Average People Pillar rating. The team benefits from the firm's five-year retention rate of 100%. However, the rating is limited by the experience of the management team, which averages six years at this fund. The instability of its management team also detracts from the team. The fund last saw a manager change four months ago.


Paul Kim, the longest-tenured manager, has nine years of listed portfolio management experience. The strategies they currently manage have an average Morningstar Rating of 2.0 stars, demonstrating disappointing risk-adjusted performance compared with category peers. Paul Kim draws on only one other listed manager. Together, they are adequately equipped with six years of average listed portfolio management experience.

Below Average

People

Simplify Asset Management has some investor-friendly attributes, but other attributes warrant caution, 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. Only two years of average tenure among Simplify Asset Management's longest-tenured managers gives us pause. In isolation, seasoned teams tend to have more experience to draw upon should they need to navigate turbulent market conditions. The Simplify Asset Management roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as evidenced by its average three-year Morningstar Rating of 2.0 stars.

Parent

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