Key Takeaways
- • Simplify Asset Management is launching the Simplify DBI CTA MF Index ETF (SDMF), a lower-cost, index-based alternative to the USD 1.9 billion iM DBi Managed Futures Strategy ETF (DBMF), with fees of 35 basis points versus DBMF's 85 basis points—a 50% fee reduction.
- • The new ETF will employ a swap-based structure rather than direct futures trading, potentially delivering additional tax efficiency benefits for investors while maintaining exposure to managed futures strategies.
- • The product is scheduled for January 2025 listing in the US and represents Simplify's strategic positioning to capture allocators using ultra-low-cost ETF model portfolios that currently underweight hedge fund strategies due to high expense ratios.
- • DBi managing member Andrew Beer states the innovation addresses a market gap: "no one has found a way to deliver a simple low-cost beta solution to a hedge fund strategy," positioning index-based managed futures as a first-mover entry point into trillions of dollars in ETF-based model portfolios seeking proven diversifiers.
- • The launch exemplifies "eating your own cooking"—Simplify is cloning a competitor's successful product to demonstrate the viability of passive, low-cost hedge fund beta across the broader institutional investor base.
Summary
Simplify Asset Management is preparing to enter the managed futures ETF space with a direct competitive offering designed to undercut pricing while leveraging index-based methodology. The Simplify DBI CTA MF Index ETF will track the DBi CTA Managed Futures Index, replicating the pre-fee performance of the industry's largest managed futures funds at a significantly lower cost structure than the existing DBMF benchmark.
The fee advantage is substantial: at 35 basis points, the new SDMF ETF will charge half the 85 basis points levied by the original DBMF, which currently manages USD 1.9 billion in assets. Beyond cost reduction, Simplify's structural innovation centers on a swap-based approach rather than direct futures trading. According to DBi's Andrew Beer, this methodology may deliver incremental tax efficiency, addressing a structural inefficiency in the active managed futures ETF model that has limited institutional adoption among low-cost index portfolios.
Beer frames the launch as solving a fundamental market problem. While the active ETF space has experienced rapid growth, he notes that "everyone is rushing to build more and more active ETFs and no one has found a way to deliver a simple low-cost beta solution to a hedge fund strategy." With trillions of dollars deployed in ultra-low-cost ETF models carrying overall expense ratios below 20 basis points, high double-digit fee active ETFs remain structurally excluded from these allocations. Beer contends that a low total expense ratio index-based managed futures product can become "the first hedge fund product that will make inroads into trillions of dollars of ETF model portfolios that desperately need proven diversifiers."
The timing and strategic positioning suggest Simplify is targeting the allocator heterogeneity Beer identifies—institutional investors with specific allocation needs for diversification who currently lack accessible, low-cost managed futures exposure within passive frameworks. The January 2025 US listing marks a direct test of whether cost reduction and structural simplification can convert hedge fund strategy demand into broader institutional adoption at scale.
The fee advantage is substantial: at 35 basis points, the new SDMF ETF will charge half the 85 basis points levied by the original DBMF, which currently manages USD 1.9 billion in assets. Beyond cost reduction, Simplify's structural innovation centers on a swap-based approach rather than direct futures trading. According to DBi's Andrew Beer, this methodology may deliver incremental tax efficiency, addressing a structural inefficiency in the active managed futures ETF model that has limited institutional adoption among low-cost index portfolios.
Beer frames the launch as solving a fundamental market problem. While the active ETF space has experienced rapid growth, he notes that "everyone is rushing to build more and more active ETFs and no one has found a way to deliver a simple low-cost beta solution to a hedge fund strategy." With trillions of dollars deployed in ultra-low-cost ETF models carrying overall expense ratios below 20 basis points, high double-digit fee active ETFs remain structurally excluded from these allocations. Beer contends that a low total expense ratio index-based managed futures product can become "the first hedge fund product that will make inroads into trillions of dollars of ETF model portfolios that desperately need proven diversifiers."
The timing and strategic positioning suggest Simplify is targeting the allocator heterogeneity Beer identifies—institutional investors with specific allocation needs for diversification who currently lack accessible, low-cost managed futures exposure within passive frameworks. The January 2025 US listing marks a direct test of whether cost reduction and structural simplification can convert hedge fund strategy demand into broader institutional adoption at scale.
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