The EQLS Strategy: A Closer Look at the Simplify Market Neutral Equity Long/Short ETF

“Unlocking the Potential of AI in Market Neutral Equity Long/Short ETFs”

In the world of investing, staying ahead of the curve is crucial. And with the rise of artificial intelligence and machine learning, new opportunities are emerging for savvy investors. One such opportunity is the Simplify Market Neutral Equity Long/Short ETF (EQLS), which is pioneering the use of AI technology in the investment space.

Launched on 06/12/2023, EQLS is an actively managed fund with an expense ratio of 1.00%. What sets this ETF apart is its use of machine learning to seek positive absolute return and income. By leveraging AI algorithms, EQLS aims to identify securities with the best expected returns and construct a portfolio that is market neutral and leveraged by a factor of 2.

The fund primarily invests in total return swaps that provide exposure to a basket of common stocks. These stocks are selected using a sophisticated multi-factor quantitative ranking system based on machine learning. With over 500 fundamental factors considered, the ranking system aims to classify securities based on forward-looking return expectations.

EQLS is not your typical equity ETF. It holds swap contracts on common stocks, which introduces additional counterparty risk compared to plain vanilla equity ETFs. However, this unique approach allows the fund to achieve a net long position in sectors like financials, energy, technology, materials, and industrials, while maintaining a net short position in sectors like healthcare and consumer staples.

As of writing, EQLS has less than 12 months of track record, making it too early to assess the strategy’s long-term potential. However, the fund has lagged behind safer options like the treasury bill fund SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) by 4% in total return since inception.

When compared to other market neutral equity ETFs like AGF U.S. Market Neutral Anti-Beta Fund (BTAL) and Leatherback Long/Short Alternative Yield ETF (LBAY), EQLS stands out for its lower expense ratio and asset under management. Despite its weaker liquidity, EQLS has the potential to deliver competitive returns in the long run, thanks to its innovative AI-driven investment approach.

In conclusion, Simplify Market Neutral Equity Long/Short ETF is at the forefront of leveraging AI technology in the investment space. While the fund’s performance in the short term may be underwhelming, the long-term potential of this innovative strategy is worth watching. Investors looking to diversify their portfolio with a unique, AI-driven approach should keep an eye on EQLS and its performance in the coming years.