In a recent special edition of Behind the Ticker recorded live at the Exchange ETF Conference, Paisley Nardini, Vice President and Client Portfolio Strategist at Simplify Asset Management, joined the show to discuss her path from bond trading to ETF strategy—and dive into Simplify’s Managed Futures Strategy ETF, ticker CTA. With a career that began on a bond trading desk and later evolved through roles at PIMCO and in institutional portfolio management, Nardini has developed a strong passion for bringing hedge-fund-caliber strategies to a broader investor base.
About Paisley Nardini and Simplify
Simplify launched in 2020 following a key SEC rule change that expanded the use of derivatives in ETFs. Since then, the firm has grown to over $7 billion in AUM across 35 ETFs, becoming known for its innovative use of options and derivatives. While often categorized as an “alternative ETF issuer,” Nardini emphasized that Simplify’s lineup includes not only pure diversifiers like CTA but also core active fixed income and systematic equity strategies. She described CTA as a capital-efficient, hedge-fund-style managed futures fund focused solely on commodities and interest rate futures—excluding equities and currencies to offer a cleaner source of diversification.
Investment Strategy and Approach
CTA stands out by employing a multi-signal model composed of four drivers: trend, mean reversion, intermarket (or risk-off), and carry. The trend signal captures directional market movements across short, medium, and long-term timeframes. The mean reversion signal acts as a counterbalance, scaling exposure when trends become extended. The intermarket factor assesses cross-asset relationships—such as equities selling off while bonds rally—to adjust positioning dynamically. Finally, the carry signal evaluates the interest rate curve to avoid negative carry in periods of inversion. This hedge-fund-inspired, daily-rebalanced model is powered by research from Altis Partners, a UK-based CTA firm.
The fund uses futures contracts, which naturally embed leverage, but Simplify imposes a 25% margin-to-equity constraint to manage risk. Unlike many peers, CTA has no sector or position caps, allowing for high-conviction trades—such as its profitable exposure to the cocoa market in 2023. Nardini also addressed the ETF’s performance through volatile periods, highlighting its ability to pivot quickly, reduce drawdowns, and remain uncorrelated to both stocks and bonds. With negative correlation to equities and the potential for equity-like returns, CTA is increasingly being used as a key diversifier in modern model portfolios.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Paisley Nardini covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
There's a tremendous value or benefit to those of us that are combining this which 99.9% of us are with stocks with bonds and so when we have these periods of market drawdown whether it's in stocks or bonds. The benefit of a correlation perspective to smooth volatility to smooth the drawdowns. Is tremendous as it relates to portfolio construction. I can just pointing out again in February the most recent sell off we saw. The ability then to kind of pivot and take advantage of all the sudden asset prices are trending lower and the ability again to take short positions capitalized on that provided attractive absolute returns as the broader market selling off.
We have one risk constraint in our CTA ETF which is a 25% margin to equity ratio and so the underlying noional exposure that we're achieving in the strategy is far greater than the margin that we have to post as collateral. And so again that 25% margin to equity ratio is imposed on us this is a loss just coming up with us so it is an outside third party so I think that helps with a bit of the checks and balances.
Market Context and Positioning
Today we have on Paisley Nardini, she is Vice President and client portfolios strategist at Simplify asset management. We are diving right into their Simplify managed futures ETF, ticker, CTA, the pick to good one there. But really interesting strategy, it plays four different signals to come up with the underlying active asset allocation, it's done very well, specifically in times of volatility, but I will let Paisley tell the story.
And I highlight that because a lot in managed futures broadly, you can really have access to all parts of the market equity for an exchange crypto now as well. We were very intentional at the launch of our strategies to provide our clients with the most capital efficient diversifier in the report fully looks at the end of the day. If you're pulling away from that 60 40 whether it be stocks or bonds or both. You really want to ensure that you're going to have a diversified source of risk and return.
And I would say for anyone listening that might be concerned on that embedded leverage historically CTA has been around 12 to maybe 13 or 14% margin to equity so again our cap is 25% we are far below that. And all of the other so called like risk constraints that could be applied we don't have constraints beyond that 25% margin to equity ratio so what that means is we don't have sector caps we don't have position caps in that is very intentional as well because like any time you're taking active risk it's usually a very few subset of whether you're picking individual stocks or selecting futures contracts that are driving that alpha.
Notable Insights
"So being able to understand the strategies from how they work, from a positioning perspective, the impact of a market, and then having to articulate that work with clients, I think at the end of the day, is what's most fulfilling for me."
"We were very intentional at the launch of our strategies to provide our clients with the most capital efficient diversifier in the report fully looks at the end of the day."
Key Takeaways
- Simplify launched in 2020 following a key SEC rule change that expanded the use of derivatives in ETFs.
- With negative correlation to equities and the potential for equity-like returns, CTA is increasingly being used as a key diversifier in modern model portfolios.
- The conversation explores important themes in quantitative investing relevant to today's advisor landscape.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Paisley Nardini highlights important considerations around fixed income. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of fixed income and portfolio construction discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Paisley Nardini, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.