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Rating:With a UCLA Ally, a $4B-AUM ETF Shop Bets On the Intangible Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, April 17, 2024

With a UCLA Ally, a $4B-AUM ETF Shop Bets On the Intangible

Reported by Neil Anderson, Managing Editor

The folks at a four-year-old, $3.99-billion-AUM (as of yesterday) fund firm from Gotham are teaming up with a professor in Southern California to help investors bet on "intangible capital" via a pair of new index funds.

Andrea L. Eisfeldt
The Anderson School of Management at UCLA
The Laurence D. and Lori W. Fink Endowed Chair in Finance and Professor of Finance
Yesterday, David Berns, chief investment officer of Simplify Asset Management Inc. (SAMI) [profile], and Andrea Eisfeldt, finance chair and professor at UCLA's Anderson School of Management, unveiled the launch of the Simplify NEXT Intangible Core Index ETF (NXTI on the Cboe BZX Exchange, Inc.) and the Simplify NEXT Intangible Value Index ETF (NXTV). The new ETFs are both seies of Simplify Exchange Traded Funds.

NXTV and NXTI both come with an expense ratio of 25 basis points, and their inception date was Monday. By the end of yesterday, NXTI had $2.249 million in AUM, and NXTV had $2.492 million.

New York City-based SAMI serves as investment advisor to NXTV and NXTI, Eisfeldt's Eisfeldt Consulting, LLC (EC) serves as index provider, and Solactive AG serves as index calculation agent. The new funds' PM team includes Berns and Paul Kim, CEO of SAMI.

Both NXTI and NXTV are designed to invest in companies based on their intangible capital. The first fund is designed to track EC's Next Intangible Core Index (which includes stocks with the highest ratios "of intangible capital-to-book assets"), while the second fund is designed to track EC's Next Intangible Value Index (which includes stocks with the highest ratios of "markeet capitalization to intangtible-adjusted book value").

Berns offers brand value, patents, R&D, and software as some examples of intangible, i.e. non-physical, capital. He notes that such assets "lack physical form and may not be visible on company balance sheets." He notes that "traditional approaches to valuation and traditional approaches to equity analysis are undergoing a sea change."

"Tangible assets have been a declining component of equity valuations for decades," Berns states. "Our belief — confirmed by academic reseach — is that the most succcessful corporations have exhibited relatively 'asset-light' characteristics, which much higher allocations to intangible capital than their peers."

Eisfelt lauds the Simplify team as "a natural patner in bringing these approaches to market." She highlights Simplify's "forward-looking lineup of strategies and their knowledge of the crucial importance of identifying and measuring intangible assets for understanding equity valuations."

"I am incredibly excited to be working with the Simplify team on these new indexes," Eisfeldt states.

"We're thrilled to be working with someone of Andrea's caliber to bring these new approaches to market," Berns states. "Andrea's insights and research have played a major role in capturing and clarifying just how intangible capital should be considered when evaluating a company's valuation, use of capital, and more."

NXTV and NXTI's other service providers include: Bank of New York Mellon as administrator, custodian, fund accountant, and transfer agent; Cohen & Company, Ltd. as independent accounting firm; ACA's Foreside Financial Services, LLC as distributor and chief compliance offer provider; and Thompson Hine LLP as counsel. 

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