Simplify Launches FOXY ETF To Navigate FX Volatility, Tariff Uncertainty

Simplify Asset Management launched the Simplify Currency Strategy ETF FOXY, an actively managed fund designed to benefit from foreign exchange market dynamics. The launch on Tuesday comes as global currency volatility rises, driven by Trump's push to weaken the dollar and uncertainty around tariffs.

In an interview with Benzinga, Managing Director, Portfolio Manager, and Emerging Markets Specialist at Simplify, Christopher Getter said, “There really isn't anything available to investors in the space, so in some sense, our ability to be original with a distinct product that is not an expression on the dollar, per se—although there are a handful of single currency products out there—motivated us.”

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The new ETF employs two strategies to generate returns with minimal dependence on equities or bonds. The first strategy is an Emerging Markets carry trade, utilizing eight currency pairs, each benchmarked against the U.S. dollar. The fund will hold “long” positions in the four currencies offering the highest interest rates while “shorting” the four with the lowest rates. This strategy seeks to profit from yield differentials and currency fluctuations.

The second strategy takes six different pairs of G10 currencies. It involves taking “long” positions in the three currencies exhibiting the strongest yield momentum increases, while “shorting” the three with the weakest. The strategy benefits from the mean-reverting nature of G10 currencies, potentially lowering overall risk by combining lesser-correlated approaches across different markets. “This approach, which we have refined through a number of iterations, provided the best alpha and return potential,” Getter added.

The backdrop of global currency fluctuations makes FOXY's launch particularly timely. “Beyond the direct targets of tariffs like Mexico and China, we think the EM currencies can do well against the USD, which should provide a boost to performance,” said Getter.

The ETF also accounts for heightened FX volatility driven by geopolitical tensions and trade policies, such as the fresh batch of tariffs. “Without getting too deep into the specifics, we can scale our exposures at both the individual currency level as well as at the overall portfolio level to either take advantage of volatility or to adopt more of a defensive posture,” said Getter.

Amid policy uncertainty and geopolitical shifts, actively managed currency strategies like FOXY could offer investors an alternative way to diversify and hedge against volatile FX markets. “Correlations across traditional asset classes (think of a typical 60/40 mix) have risen, so we think there is a demand for uncorrelated asset classes and that this demand is becoming increasingly structural in nature,” Getter said.

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