Episode summary
Inside Simplify CTA: Diversification Beyond Stocks & Bonds
ETF Spotlight
· · Hosts: Jeffrey Sherman, Bill Sokol · Guests: Paisley Nardini
Summary
Simplify’s CTA ETF is presented as a liquid, rules-based managed futures strategy designed to provide low correlation to traditional stocks and bonds. Paisley Nardini says the fund was launched in March 2022 in partnership with Altis Partners, bringing an institutional hedge fund process into an ETF wrapper for advisors looking to diversify around equity and bond volatility.
The strategy is built around trend following, but Nardini says it does not rely on price alone. Altis develops the signals, Simplify handles execution and portfolio management, and the model also looks at macro inputs such as the shape of the yield curve and correlations between stocks and bonds. She says that broader signal set helps the fund avoid blindly staying exposed when trends reverse or when risk is not being rewarded.
Nardini also emphasizes risk management. CTA is unconstrained and not volatility targeting, so it can scale exposure up or down as conditions change, including during market dislocations like the tariff tantrum earlier in 2025. She says the fund uses treasury bills as collateral and keeps margin to equity capped at 25%, typically around 10% to 13%, while the strategy remains concentrated in North American commodities and interest rates rather than equities or FX.
Key takeaways
- Paisley Nardini says CTA is meant to diversify portfolios with low correlation to stocks and bonds, and she cites about a negative 0.2 correlation to the S&P 500 since inception.
- The fund’s process is rules-based and institutional, with Altis Partners generating signals and Simplify handling trading and portfolio management.
- Nardini says CTA can go risk-off dynamically and is not volatility targeting, so exposure can scale from high single-digit annualized vol to as high as 20% to 30% at times.
- She says the fund excludes equity and FX futures to make it a more capital-efficient diversifier alongside equity portfolios.
- Nardini says the strategy uses a 25% margin-to-equity cap, but is typically around 10% to 13%, currently about 10%.
- On rates, she says CTA was short the front end last year and is in a similar short posture now because the yield curve remains inverted.
Notable quotes
“CTA, which is the ticker for our Simplify Managed Futures Strategy. How did this come to be”
“CTA is entirely rules based, meaning there's no manager discretion or fundamental kind of overriding”
“we have a very unconstrained approach to how we take risk, I say that as a benefit”
How the episode opens
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Seeking Alpha is not a licensed securities dealer, broker, US investment adviser, or investment bank. Hey, everyone. Daniel Snyder back with another episode of ETF Spotlight.
Now this week, we are joined by Paisley Nardini. She is the Managing Director and Head of Multi-Asset Solutions, over at Simplify, and we're diving into the CTA ETF today. I know it's brief abbreviation, but we're going to dive deeper into it today with Paisley.
So thank you so much, Paisley, for taking the time. We have so many questions. I mean, specifically, CTF is, sorry -- CTA is structured to deliver uncorrelated returns across futures, commodities, and long short portfolio.
Correct? So if you wouldn't mind, just maybe walk us through how this specific fund was created and how it operates that investors need to know about. Yeah.
Well, first and foremost, Dan, thanks for having me, and thanks to Seeking Alpha for highlighting our Managed Futures Strategy, which we're super excited about. I think for the reasons you already mentioned, low correlation, traditional stocks and bonds. And I think this is a growing part of the market that advisor portfolios are seeking to add just given, volatility in bonds and high valuations and equities.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- cta trend following
- multi-asset diversification
- uncorrelated returns
- risk-off rebalancing
- rules-based strategies
Companies and tickers mentioned
- Simplify
Watch the episode
Watch “Inside Simplify CTA: Diversification Beyond Stocks & Bonds” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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