A Hater of Passive Investing Joins an ETF Firm to Wage His War
To his 50,000 Twitter followers, Michael Green is an acerbic critic of the passive investing boom and the disquieting distortions it has inflicted on the U.S. stock market.
So a few eyebrows may have been raised this week when Green revealed that he’s joining Simplify Asset Management, a $274 million issuer of exchange-traded funds. With more than $6 trillion in assets in the U.S. alone, ETFs have almost singlehandedly fueled the passive revolution that Green reckons has made markets more fragile and helped inflate an unprecedented asset bubble.
But the move isn’t a break for the 50-year-old Californian so much as a continuation. Like his former employer, hedge fund Logica Capital, Simplify uses options in active strategies to help investors ride the upside while guarding against crashes. For Green, that’s the best way to navigate markets he says are dominated by eye-watering asset prices vulnerable to a spectacular fall.
“The more people are doing the same thing, the more you experience the phenomenon of position crowding or market illiquidity,” Green said in a phone interview. “One of the reasons why my profile has risen is because I have tapped into an awareness there’s something wrong.”
Green, who joins Simplify as chief strategist and portfolio manager, says his new employer has an “aggressive” launch schedule, with new funds already slated for next month. The New York-based firm, which started in 2020 and hired derivatives expert Harley Bassman earlier this year, has listed nine products in less than eight months.
The largest is the $143 million Simplify U.S. Equity PLUS Downside Convexity fund, ticker SPD, which tracks U.S. stocks while seeking to boost performance during drawdowns. Like other Simplify funds, it uses options to deliver convexity, roughly defined as accelerated moves in response to market swings.