Simplify High Yield ETF

Simplify High Yield ETF (CDX) seeks returns from junk bonds, which are lower-rated corporate bonds. It mostly does this through swaps on high-yield bond ETFs instead of owning the bonds. A swap is a contract that passes along another asset's return. CDX adds an actively managed credit hedge and an option-writing strategy. The fund pays monthly, with a trailing yield of 8.93% as of October 27, 2026, and charges 0.50% a year.

• Over the year to Oct 27, 2026, CDX returned -3.8%, 8th of 8 among similar funds.
• Its worst full calendar year was 2024 (+7.7%); its best was 2023 (+12.7%).
• The deepest fall in its price history was 11.8% (Mar 29, 2022 to Oct 20, 2022), recovered by Nov 3, 2023.

As of Jun 30, 2026, the fund held 7 securities; the ten largest made up 100.11% of assets.

The bonds mature in 0.3 years on average (weighted by size), with an average coupon of 0%.

• Over the three months to Jun 30, 2026, investors withdrew a net $59.2M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.53%, -0.38%, -0.08%.

CDX is actively managed. Its goal is to maximize total return. It does not track an index. It must keep at least 80% of net assets in investments that give exposure to junk bonds. Junk bonds are those rated below BBB- by S&P or below Baa3 by Moody's. Most of that exposure comes from total return swaps on high-yield bond ETFs. The fund also buys call options and sells put options on those ETFs. Simplify picks the ETFs based on price, liquidity and track record. As of June 30, 2026, the swaps referenced the iShares iBoxx $ High Yield Corporate Bond ETF (HYG). The swap counterparties were Nomura, Morgan Stanley and Citibank.

A swap only requires collateral, so most of the money sits in near-cash holdings. As of June 30, 2026, 49.8% was in Simplify Government Money Market ETF (SBIL) and 24.8% in Simplify Short Term Treasury Futures Strategy ETF (TUA). About 25.5% was in Treasury bills averaging 0.3 years to maturity.

Up to 20% of the portfolio can go into extra derivatives with two jobs. The first is a credit hedge: swaps meant to gain when bonds, or sometimes stocks, fall. The second is income from writing options and option spreads on stocks, debt, volatility indexes, commodities and currencies. These positions are reset monthly, quarterly or yearly, or more often when markets swing. Derivatives can magnify losses, and the hedge will not fully protect the fund.

• CDX charges 0.5% a year, versus an average of 0.86% for the similar funds below (1st of 8, cheapest first).
• Of that, 0.38% is the management fee; the rest covers other fund expenses.
• Using the prospectus's standard example, $10,000 invested would cost about $51 in the first year and $628 over 10 years (assuming a 5% annual return).

Its main draw is monthly income from junk bond exposure and option premiums, though its swaps and option overlay make it more complex than a plain bond fund.

CDX launched in February 2022. It has no record through the 2008 or 2020 crashes, and it missed the start of the 2022 bear market. Its deepest drop was 11.8%, from March 29 to October 20, 2022. It had recovered by November 3, 2023. Every full calendar year so far has been positive, and 2024 was the weakest at 8.62%. But the fund was down 2.9% for 2026 through October 27. A retiree who sells shares in a year like that locks in losses. The trailing yield was 8.93% as of October 27, 2026, paid monthly. Much of that income is usually taxed as ordinary income. The 0.50% expense ratio comes to $51 in year one and $628 over 10 years on $10,000, using the SEC's standard example. Past results don't predict future returns, and a retirement plan should look at the whole portfolio, not one fund.

Matched by other buffer (defined-outcome) funds, largest first.