Buffer ETFs can provide investors with protection against market losses while still allowing them to participate in market gains. These ETFs are designed to preserve wealth, rather than create it, and come with different buffers and caps to protect against market losses or gains.
In this Investment Fuse USA presentation, delivered by Allianz, the benefits of investing in ETFs that provide exposure to the market while limiting downside risk and the benefit of using ETFs to diversify an existing portfolio are explored.
Interesting statistics
- The light blue jagged line shows the return of the S&P 500, and the shaded light blue area shows the returns of the market that the ETF participates in.
- The cap in this case is 16%.
- The price for one share of the ETF was $27.77 at the end of the outcome period, meaning the investor gained a 16% return.
- The estimated cap for the December T 10% buffer is between 22 to 25%.
- The light blue bar shows the expected return on the S&P 500, and the darker blue bar shows the return of the ETF itself.
- One thing that's important to note, and we get a lot of questions on this, is that our ETFs, they rebalance at the end of the outcome period.
- The graphs for all these funds show continuous updates throughout the day, with a 15 minute lag.
- So which again is either 10% or 20% and it's over a specific, a specific period of time, we refer to that period as an outcome period.
Watch the full session recording