Simplify Volatility Premium ETF

SVOL

Market cap $716M

It's been tough to lose money on ETFs this year — nearly every actively traded U.S. diversified ETF is up in 2025 so far. But there's a tiny number of unlucky ETFs sinking amid a rising tide.

SVOL offers a less risky, income-producing volatility-selling strategy, making it easier to hold than more aggressive or levered volatility ETFs. Recent underperformance is modest relative to peers, but risk mitigation reduces capital efficiency and fees remain a drawback. Near-term caution is warranted due to S&P 500 concentration, negative seasonality, and potential volatility spikes in September/October.

I downgrade SVOL to hold due to increased risk from management shifting away from stable Treasuries into more volatile equity positions. SVOL's yield remains high, but NAV has dropped over 20%, undermining capital preservation and future income sustainability. Active management's response to rate cuts and VIX spikes has made the portfolio more volatile and less resilient to market shocks.

June U.S. exchange-traded monthly paid (MoPay) dividends, upsides, and net-gains include: 1. Stocks-by-yield (80); 2. Stocks-by-price-upside (30); 3. Closed-End-Investments, Exchange-Traded-Funds & Notes (CEICs/ETFs/ETNs) by yield >10% (80); 4. ‘Safer' Ideal-Dividend-Equities by Cash-Flow-Margins. Analyst estimates suggest top MoPay stocks could net 16.48% to 33.67% gains by June 2026, with an average net gain of 23.57% and higher-than-market risk. The dogcatcher rule highlights 31 'safer' MoPay stocks where dividends from $1K invested exceed share price, positive returns, and strong free cash flow coverage.

SVOL's portfolio is now more conservative, shifting from leveraged equities to bonds, reducing downside risk in future corrections. The VIX term structure has normalized to contango, allowing SVOL to generate higher premiums and sustain a yield near 20%. Despite improved positioning, I remain speculatively bearish on SVOL due to overvalued US stocks and persistent macroeconomic risks.

On April 7, I rated the Simplify Volatility Premium ETF (SVOL) a Strong Buy due to extreme market fear and VIX backwardation. The VIX has since normalized, greed is back, and SVOL has rallied, reducing its upside potential and increasing the risk potential. Therefore, I am downgrading SVOL to a Sell. Some parts of SVOL's portfolio have shifted to a more defensive stance, with increased Treasury holdings, reduced equity exposure, and further-dated VIX short positions, signaling caution.

The Simplify Volatility Premium ETF trades at a 17.8% distribution rate, benefiting from selling short-term VIX futures, but struggles during market crises. SVOL's strategy involves selling volatility and using hedges like out-of-the-money VIX calls, making it less capital efficient but potentially more stable. Despite recent poor performance, SVOL's active management and diversified approach make it a compelling long-term volatility selling ETF.

SVOL's original strategy of shorting the VIX has failed due to sustained high volatility, leading to negative returns and heightened risks for investors. The fund has pivoted to a new, incoherent strategy involving leveraged S&P 500 futures and options, which carries significant downside risks. Current economic and political uncertainties, including the US-China trade conflict and mixed Fed signals, are likely to maintain high volatility levels.

The Simplify Volatility Premium ETF (SVOL) is a Strong Buy due to high market volatility, which is generally short-lived, offering a strong entry point. SVOL's strategy involves shorting VIX futures and investing in income-generating assets, with a forward yield of over 20% at recent prices. The ETF manages risk with options and limited VIX futures exposure, making it less likely to implode like past volatility ETFs.

SVOL is akin to a "risk insurance provider" on the S&P 500. It earns premiums in stable markets, but faces huge losses during significant market drawdowns. SVOL's recent collapse highlights its vulnerability to rapid VIX rises, exacerbated by poor asset management practices. SVOL's high equity exposure and poor risk management exacerbate its losses, making it unsuitable for income-driven retired investors, but conditionally suitable for pro-risk speculators.