Simplify US Equity PLUS Managed Futures Strategy ETF (CTAP)

The Simplify US Equity PLUS Managed Futures Strategy ETF (NASDAQ: CTAP) holds two things at once: a portfolio of US stocks and a layer of managed futures contracts that are meant to cushion losses when equity markets turn sharply downward. It is built for investors who want to own the stock market but wish to reduce the sting when corrections arrive.

The core idea is that stocks deliver long-term growth but endure painful drawdowns. Adding a managed futures overlay — the same trend-following engine as the standalone CTA fund — creates a performance profile that is supposed to soften those peaks and valleys without sacrificing meaningful upside. When the stock market rises, CTAP rises with it, though it lags slightly because some capital is anchoring the managed futures side. When the market falls, the managed futures positions often rally, trimming the loss.

The structure and the tradeoff

CTAP allocates a portion of its assets to US equity exposure — typically through the stocks in the Russell 2000, Russell 1000, or a broader market proxy — and the remainder to the managed futures strategy. The exact split varies by share class or fund version, but a common allocation is 70% equity, 30% managed futures, or a similar ratio.

This is not simply a buy-and-hold index fund. The managed futures portion rebalances frequently based on trend signals, so the fund is actively managed despite the name. That active management costs money — the expense ratio is higher than a simple 70/30 stock-and-bond portfolio, typically in the neighbourhood of 90 to 120 basis points.

The real tradeoff is that you give up some of the equity market’s long-term upside in exchange for protection during downturns. In a roaring bull market, CTAP will gain less than a pure stock index because part of the portfolio is hedging rather than participating fully. In a bear market, that hedge pays. Over a full cycle, the return compares somewhere in between — not as high as stocks alone, but with lower volatility and smaller maximum drawdowns.

Who this is for

CTAP appeals to investors in several camps. Those near retirement or already retired often prefer smoother returns over maximum growth — they cannot afford to wait years for a 50% drawdown to recover. Investors with a low risk tolerance or a history of panic-selling during crashes benefit from the psychological cushion of knowing part of the portfolio is mechanically working against the decline. And some investors simply prefer a smoother ride and will trade a few percentage points of long-term return for it.

It is not for investors who are young, have a long time horizon, and can stomach volatility. A pure stock index fund will almost certainly deliver higher absolute gains over decades.

The managed futures component and its limits

The managed futures portion of CTAP works on the same trend-following principles as the CTA fund. It looks for directional moves in commodities, bonds, currencies, and sometimes equity indexes and profits from them. In sharp, sustained market downturns — the kind that create opportunities for trend-following strategies — this component has historically cushioned losses significantly.

But like all hedges, it is expensive when you do not need it. In sideways, choppy markets, trend-following whipsaws. In a very gradual market decline, the strategy may not identify a clear trend quickly enough to protect much. And because the hedge is built into the portfolio permanently, you pay its cost — the expense ratio — even in years when the stock market rises placidly and the protection never gets used.

Liquidity and costs

CTAP shares trade on NASDAQ with good liquidity, so purchase and redemption are straightforward. The larger cost is the ongoing expense ratio, which reflects both the complexity of managing a dual-strategy portfolio and the active trading that keeps the managed futures layer turning.

How to evaluate it

Pull the prospectus and fund fact sheet from Simplify Investments and confirm the exact allocation between equity and managed futures, as versions may differ. Download the fund’s full return history and study it alongside pure equity-index returns — see whether the downside protection in bear markets is worth the opportunity cost in bull markets.

Calculate the maximum drawdown in periods like 2008, 2020, and 2022. A meaningful reduction in peak-to-trough losses is what CTAP promises; verify that it has delivered historically. Correlation to stock indexes should be positive (you still own stocks) but lower than a pure equity fund.

Finally, run a scenario: assume you own both a 100% stock portfolio and CTAP, then model what would have happened to each during a past market crash. That comparison shows whether you value the smoother ride enough to accept the permanent drag on returns.