What are the key takeaways from this Animal Spirits episode?

Key insights include: **Structured notes accessibility:** Simplify converts the $450 billion structured notes market into ETF format with 52 laddered weekly positions, eliminating operational burdens of monitoring individual contracts while maintaining continuous liquidity for investors at any account size.; **Income mechanics:** The strategy generates 9-11% yields by combining short-term treasury income with premiums from selling barrier options on equity indices. Positions auto-call after three months if indices rise, allowing premium stacking two to three times annually.; **Barrier protection specifics:** Investors avoid losses unless equity indices fall below 30% at contract expiration. Historical data shows barriers broke only 7.8% of the time over 35 years, concentrated during financial crises, while 92% of contracts expired profitably.

What did Jeff Schwartie discuss on Animal Spirits?

Jeff Schwartie from Simplify ETFs explains how auto-callable barrier income ETFs package structured notes into liquid wrappers, offering double-digit yields with 30% downside protection through laddered option contracts on equity indices. Key topics include: **Structured notes accessibility:** Simplify converts the $450 billion structured notes market into ETF format with 52 laddered weekly positions, eliminating operational burdens of monitoring individual contracts while maintaining continuous liquidity for investors at any account size.; **Income mechanics:** The strategy generates 9-11% yields by combining short-term treasury income with premiums from selling barrier options on equity indices. Positions auto-call after three months if indices rise, allowing premium stacking two to three times annually..

How long is this episode of Animal Spirits?

This episode is 29 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

Animal Spirits

Talk Your Book: Structured Notes in an ETF

January 19, 2026

29 min episode · 2 min read

Jeff Schwartie

Episode

29 min

Read time

2 min

Topics

Investing, Fundraising & VC, Sales & Revenue

AI-Generated Summary

Published Jan 19, 2026

Key Takeaways

✓Structured notes accessibility: Simplify converts the $450 billion structured notes market into ETF format with 52 laddered weekly positions, eliminating operational burdens of monitoring individual contracts while maintaining continuous liquidity for investors at any account size.
✓Income mechanics: The strategy generates 9-11% yields by combining short-term treasury income with premiums from selling barrier options on equity indices. Positions auto-call after three months if indices rise, allowing premium stacking two to three times annually.
✓Barrier protection specifics: Investors avoid losses unless equity indices fall below 30% at contract expiration. Historical data shows barriers broke only 7.8% of the time over 35 years, concentrated during financial crises, while 92% of contracts expired profitably.
✓Mark-to-market reality: During COVID's 35% drawdown, the strategy showed 27% unrealized losses initially but recovered as positions matured and got called on the rebound. Only the expiration day value determines barrier breach, not intra-period volatility.

What It Covers

Jeff Schwartie from Simplify ETFs explains how auto-callable barrier income ETFs package structured notes into liquid wrappers, offering double-digit yields with 30% downside protection through laddered option contracts on equity indices.

Key Questions Answered

•Structured notes accessibility: Simplify converts the $450 billion structured notes market into ETF format with 52 laddered weekly positions, eliminating operational burdens of monitoring individual contracts while maintaining continuous liquidity for investors at any account size.
•Income mechanics: The strategy generates 9-11% yields by combining short-term treasury income with premiums from selling barrier options on equity indices. Positions auto-call after three months if indices rise, allowing premium stacking two to three times annually.
•Barrier protection specifics: Investors avoid losses unless equity indices fall below 30% at contract expiration. Historical data shows barriers broke only 7.8% of the time over 35 years, concentrated during financial crises, while 92% of contracts expired profitably.
•Mark-to-market reality: During COVID's 35% drawdown, the strategy showed 27% unrealized losses initially but recovered as positions matured and got called on the rebound. Only the expiration day value determines barrier breach, not intra-period volatility.

Notable Moment

The fund actually benefits from higher volatility environments, earning 12.9% distributions instead of the targeted 10% during periods like the tariff tantrum and government shutdown, contrary to most income strategies that suffer from volatility.

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Episode Transcript

Today's animal spirits talk your book is brought to you by Simplify ETFs. Go to simplify.us to learn more about their whole suite of equity income ETFs at simplify.us. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnick and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Brit Holt Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Brit Holt Wealth Management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Today, we talk to Jeff Schwartie from Simplify ETF. We've talked to Paul Kim, the founder of Simplify, a number of times in the past. Pretty much right from when they kind of found it, which I believe was, like, in the pandemic. And they've always tried to do things a little differently. It like, very interesting, options based, alternative, and they have this whole group of barrier ETFs. So there's a simplified barrier income ETF. They have this target 15, which targets a 15% distribution. They have a target 25, and they use options and structured notes to create these strategies. And, honestly, I'm kind of skeptical about a lot of these high distribution yield products because a lot of times, they're just returning your capital to you and, like, the actual end return to the to the user or the investor is not as great as it seems. So I went into these this talk a little skeptical, and, I didn't realize how much, like, structured products these are. These these are more structured notes within an ETF. I did not understand that. And totally redeemed yourself. Yeah. So it's interesting that how far we've come. It does seem like every year you made the point. I mean, factory ETFs used to be the big thing. Right? Like, that's all we had is we had index funds and kind of factory ETFs, and that was it. It wasn't anything very exciting. Now that it seems like every six months, there's a new form of something coming into the ETF space and seeing structured note products within ETFs is is something new. Let me take it because you're got a mouthful of something. Great podcasting. Edamame beans. Well, you were cooking. I you know? You were on a list. You said you've been gaining too much weight lately, and you haven't been happy with the scale, so you're eating healthier. So here's our talk with Jeff Schwartie from Simplify ETFs. Jeff, welcome to the show. Great to be here, Michael and Ben. 20 if we rewind the clock a little bit, like, ETF land was kinda boring for a few years. It was nothing but flows into products that cost three basis points. It was just like, I don't …

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