Simplify Buying GBTC at a Discount for its ETF

Crypto assets’ non-correlation to equity and fixed income markets and a “vast majority of U.S. investors have yet to invest in crypto” has Simplify investing 10% of the fund in Bitcoin.

Simplify Asset Management has announced the launch of Simplify US Equity plus GBTC ETF.

Filed with the US Securities and Exchange Commission (SEC) on May 23, the fund will invest at least 80% of its net assets in equity securities. The vast majority of the fund's equity portion is invested in the iShares Core S&P 500 ETF and the remaining in futures contracts.

10% of the fund is invested in Bitcoin (allocation capped at 15%) through Grayscale Bitcoin Trust (GBTC). Paul Kim, CEO of Simplify, said in a statement,

“Recent research has shown how uncorrelated crypto assets are to equity and fixed income markets, making them a possibly compelling part of a well-diversified portfolio.”

“But allocating to crypto-assets is difficult since over-the-counter offerings can present a host of challenges for investors and advisors, managing direct crypto exposure can be incredibly time consuming and onerous, and there remains no ETF on the market providing direct exposure to crypto itself.”

Through its SPBC, Simplify aims to solve these challenges and provide a “liquid, scalable way to add Bitcoin exposure to a portfolio.” The Fund charges a fee of 0.50%.

While the “true diehard” crypto investors are already into bitcoin, a “vast majority of U.S. investors have yet to invest in crypto,” said Kim, adding that surveys show the majority of financial advisors have been asked about crypto by their clients.

GBTC is a closed-end fund that invests in Bitcoin, which is currently trading at a discount of nearly 13%, recovering from a 21.23% low from May 14.

As we reported, GBTC shares which are locked for a six-month period, will start unlocking by this weekend and gain pace next month, especially in the second half of June, and the biggest unlock of shares in mid-July that will flood the market.

“We’re acquiring bitcoin via GBTC at a discount,” Kim said. “If GBTC trades at a premium in the future, we can manage the entry and rebalancing both from tax and strategic targeting perspectives, and also from the standpoint of the premium/discount.”

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