Simplify Next Intangible Core Index ETF (NXTI)

The Simplify Next Intangible Core Index ETF (NXTI) tracks an index of US companies whose value derives predominantly from intangible assets—brands, patents, proprietary software, customer lists, and data—rather than physical plant and equipment.

“Intangible assets are increasingly where competitive advantage lives; this fund follows that shift.”

What are intangible assets, and why they matter

In the industrial era, a company’s value lay in factories, inventory, land. A steel mill or a car plant was the moat. In the modern economy, value concentrates in what cannot be seen on a balance sheet: Apple’s brand and customer loyalty; Nvidia’s chip architecture and software ecosystem; Novo Nordisk’s patented medicines; Microsoft’s installed base of software users locked into Windows and Office; Spotify’s algorithmic recommendations and catalog licensing.

These intangible assets—intellectual property, brands, software, data, proprietary processes—now account for the majority of value creation in developed markets. A company with a strong brand can raise prices without losing customers. One with proprietary technology or data can fend off commoditisation. One with an embedded software ecosystem enjoys switching costs that make rivals irrelevant. The difference between a generic pharmaceutical and a patented drug is the patent. The difference between a commodity cloud service and a dominant one is the features, the integrations, the lock-in. NXTI is built on the proposition that passive investors should have an easy way to overweight this reality.

How the index is constructed

NXTI tracks the Simplify Next Intangible Core Index, a proprietary basket designed to identify and weight companies with above-average intangible asset intensity. The methodology typically measures intangible assets as a percentage of total assets or market value, then selects companies or weightings above a threshold. The index might include technology giants (where software and data dominate), branded consumer companies (where consumer goodwill is the moat), pharmaceutical and biotech firms (where patents and research are the barrier), and specialty industrial companies (where proprietary processes or data provide advantage).

The result is a concentrated tilt away from cyclical, capital-intensive businesses (oil, mining, utilities, heavy manufacturing) and toward innovation-driven, recurring-revenue, or brand-led companies. The index typically holds 50–100 stocks, overweighting names like software platforms, design houses, media companies, and health-care innovators whilst underweighting or excluding banks, energy producers, and commodity manufacturers.

Passive index approach

Unlike actively managed alternatives, NXTI simply follows the index formula—no stock-picker trying to beat it, no expensive analysis of which intangible assets will succeed and which will fail. The fund holds whatever the index specifies, rebalances on a set schedule, and charges a low expense ratio (typically around 0.4%–0.6%, in line with passive equity funds). This reduces costs and eliminates the risk that an active manager will misjudge which company’s brand or data moat is actually defensible.

Who this fund is for

NXTI suits investors who believe intangible-asset-led businesses are the defining opportunity of the modern era and who want passive exposure to that theme without stock-picking. It also appeals to someone seeking a tilt toward higher-margin, less cyclical companies within a diversified portfolio—a way to overweight innovation and software-as-a-moat characteristics without abandoning diversification entirely. Because the fund is US-focused, it is most suitable as part of a global portfolio that already includes non-US equity exposure.

Risks and concentration

The fund’s portfolio is more concentrated in technology, consumer discretionary, and health care than a market-weighted broad index. This creates sector concentration risk—if those sectors fall out of favour or underperform, NXTI will underperform with them. There is also a thematic risk: if the markets decide that intangible-asset intensity is less defensible than in prior years, or if AI or another disruption commoditises software and data advantages, the fund’s thesis weakens. Additionally, companies heavy on intangible assets often trade at premium valuations because their growth is expected to be exceptional; if that growth disappoints, the multiples can compress sharply.

Liquidity and trading

NXTI trades on a major exchange with reasonable volume, so entry and exit for retail investors are straightforward. Institutional investors moving large positions may face wider spreads, but the underlying index is liquid.

Tax efficiency

As a passive index fund, NXTI has lower portfolio turnover and fewer taxable events than active funds. For buy-and-hold investors in taxable accounts, this is an advantage over active alternatives.

How to research NXTI

Obtain the fund’s prospectus and review the index methodology in detail. Look at the current top holdings to understand which sectors and company types dominate. Compare the fund’s sector and market-cap weightings against the S&P 500 to see how much it deviates. Review performance data relative to the broad market over three, five, and ten-year periods to assess whether the intangible-asset tilt has added value. Finally, consider whether the fund’s concentrated exposure to technology and innovation-driven sectors aligns with your overall portfolio risk tolerance and diversification goals.