If you think a 25% annual payout sounds aggressive for an ETF, you're not wrong. But that's exactly what Simplify Asset Management is targeting with its newest fund, the Simplify Ancorato Target 25 Distribution ETF (XXV), which hit the market Tuesday with one of the most ambitious income objectives you'll find in the ETF space. And yes, those distributions come monthly.
How does XXV plan to deliver that kind of yield? By leaning heavily into barrier put options linked to individual stocks, plus something called "worst-of" baskets. Those worst-of structures pay out based on whichever stock in a selected group performs the poorest. The fund continuously tweaks the barriers to help it reach its monthly distribution target, essentially fine-tuning the risk and reward dials as market conditions shift.
Dave Berns, co-founder and chief investment officer at Simplify, said the fund was designed to meet investor appetite for income strategies that don't sacrifice everything on the altar of yield. XXV packages structured investing into a transparent ETF wrapper, delivering the potential upside of barrier income strategies while sidestepping the headaches of traditional structured notes.
Ancorato Capital, a firm specializing in structured products, will serve as sub-advisor for XXV. The launch adds to Simplify's rapidly expanding barrier-income collection, which recently grew with the debuts of the Simplify Barrier Income ETF (SBAR) and the Simplify Target 15 Distribution ETF (XV).
What ties these funds together is their goal of replicating the payoff mechanics of structured products without the usual baggage: no bank credit risk, no illiquidity traps, no compliance nightmares. The ETF structure offers daily liquidity and smooth transitions into new option "vintages," giving investors a more flexible way to tap into option-driven income.
"It's clear that investors have a desire for smarter ways to generate income in an environment where traditional fixed income is challenged," said Berns.
Simplify is positioning XXV as a direct response to the ongoing scramble for yield, especially as traditional bond markets struggle to deliver meaningful real returns. Whether a 25% target is sustainable over the long haul remains to be seen, but the fund certainly isn't shy about its ambitions.
