Simplify Multi-QIS Alternative ETF (QIS)

This fund tries to do something different from stocks and bonds. It is not a single bet on the market going up. Instead, it mixes several strategies—trend-following, volatility harvesting, and careful positioning across asset classes—to chase returns that move independently of what stocks do.

The core idea is straightforward. Stocks go up and down on economic news and company performance. Bonds go up and down mainly on interest-rate moves. What if you owned strategies that could make money whether the market rises or falls? Trend-following does this: it buys things that are already going up and sells things that are going down. This works in strong moves but struggles in choppy sideways markets. Volatility harvesting sells hedges when markets are calm and volatile, capturing the premium investors pay for protection they do not immediately need. Diversification by owning uncorrelated assets—currencies, commodities, managed futures—means the whole thing does not move with the stock market.

The fund manager, Simplify, constructs the portfolio using mechanical rules rather than active judgment. The methodology is transparent and published. They monitor which strategies are working right now and tilts the allocations accordingly. If trend-following is working, they increase that weight. If it is not, they dial it back. The goal is to harvest returns from multiple mechanisms at once rather than rely on any one of them.

The costs are low to moderate. The expense ratio sits around 0.65 per cent, which is reasonable for a strategy-blend fund but not cheap. You are paying for the expertise of building and maintaining the systematic strategies. But you are not paying active-management fees, which can run 1 per cent or much higher.

The volatility is usually lower than stocks. Because the fund is not moving with the stock market, it does not crash when the market crashes. This is the appeal: smoother, more stable returns than a stock fund. In a normal year, you might expect QIS to deliver modest gains—maybe 5 to 8 per cent—without the 30 per cent swings stocks have.

But there is a catch. When most alternative strategies fail at the same time, the fund struggles. Trend-following works great in a clear bull or bear market but whipsaws when the market bounces around sideways. Volatility selling works until volatility spikes, at which point it can hurt badly. In 2022, when stocks fell and bonds fell together—an unusual combination—many alternative funds stumbled because the diversification that usually helped them fell apart. The strategies are not independent; they can fail together in truly weird market environments.

The fund holds a mix of assets internally: futures contracts on stock indices, bonds, currencies, and commodities. Some positions are hedges designed to profit if markets fall. Others are directional bets that benefit from rising prices. The day-to-day mix shifts as the strategies adjust their tilts. You do not directly own stocks or bonds; you own the performance of the strategies instead.

Liquidity is fine. The fund trades like any other ETF, and Simplify manages the fund’s own holdings in liquid instruments, so entering and exiting positions is straightforward.

This is a tool for investors who want lower volatility than stocks, higher expected returns than bonds, and are willing to tolerate complex strategies they may not fully understand. It can serve as a portfolio ballast, something that does not move with your stock holdings and therefore reduces the overall swings. For very conservative investors, it is still too complex and risky. For aggressive investors, it is a distraction from higher-returning stock ownership. For someone in the middle seeking smoother returns across economic cycles, it deserves a look. Read the prospectus carefully to understand how the strategies work and what happens when they fail simultaneously. Monitor the holdings quarterly to ensure the manager is still executing the stated philosophy.