CTA Gained While the S&P 500 Collapsed. Here Is What It Holds

• Simplify Managed Futures Strategy ETF (CTA) returned 50% since March 2022 with 3.5% gains each in June, July, and August 2022, holds $1.1B in assets, and charges a 0.75% expense ratio. S&P 500 (SPY) returned 80%.

• CTA posted gains during the 2022 bear market when both stocks and bonds fell together, delivering diversification when investors needed it most.

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Most diversification strategies fail exactly when investors need them most. In the 2022 bear market, bonds and stocks fell together, leaving the traditional 60/40 portfolio with nowhere to hide. Simplify Managed Futures Strategy ETF (NYSEARCA:CTA) was built for precisely that environment, and it delivered.

CTA is an actively managed fund that takes long and short positions across commodity, currency, and fixed-income futures. The goal is returns that move independently of stocks and bonds, a strategy historically reserved for institutional hedge funds but now accessible in ETF form. As ETF Trends described it, managed futures funds “exhibit low to negative correlations with stocks and bonds” by using trend-following methodologies across multiple asset classes.

CTA profits by identifying directional trends across global markets, going long when trends are rising and short when falling. This is why it can make money during equity crashes: when stocks are in a sustained downtrend, the strategy can profit from that move rather than suffer through it.

READ: The analyst who called NVIDIA in 2010 just named his top 10 AI stocks

The clearest proof came during the 2022 bear market. While the S&P 500 fell sharply, CTA posted gains of roughly 3.5% in each of June, July, and August 2022. That kind of inverse behavior during a sustained equity selloff is exactly what the strategy promises.

The longer-term picture is more nuanced. Since its March 2022 inception, CTA has returned about 50%, while SPY has returned roughly 80% over the same period. In a sustained bull market, trend-following strategies lag equities because they are not designed to ride a single directional move indefinitely.

CTA’s tradeoffs are structural, not incidental. The strategy earns its keep during trending markets but can whipsaw badly when direction reverses frequently — a real cost in sideways years. The 0.75% expense ratio adds to that drag, compounding meaningfully over time compared to passive alternatives. Income investors should also note that distributions have been inconsistent, with year-end distributions swinging from $0.74 in 2024 to $1.64 in 2023, which reflects the strategy’s return variability rather than a reliable yield stream.

The fund has grown to over $1.1 billion in assets since its 2022 launch, with multiple institutional investors holding it as a top portfolio position. The fund has historically shown low correlation to equities during stress periods, while lagging equity returns during sustained bull markets — a tradeoff inherent to trend-following strategies.

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