Close Menu
Fund Focus News
    Facebook X (Twitter) Instagram
    Trending
    • ‘People Might Be Underestimating Demand For Spot XRP ETFs,’ ETF Expert Says As CME XRP Futures Set Open Interest Record
    • SoftBank, Rakuten tap Japan’s booming retail demand for bonds
    • Financial advice about living trusts, capital gains and COBRA
    • What is Expense Ratio in Mutual Funds? – Money Insights News
    • Billionaires Buy 2 Magnificent Index Funds That a Wall Street Analyst Says Could Soar 132%
    • not the FTSE 100 or S&P 500)
    • Five tell-tale signs that investing money is not for you
    • Big Brother star begs fans to help raise funds for hospital treatment
    Facebook X (Twitter) Instagram
    Fund Focus News
    • Home
    • Bonds
    • ETFs
    • Funds
    • Investments
    • Mutual Funds
    • Property Investments
    • SIP
    Fund Focus News
    Home»ETFs»In Today’s Volatile Markets, Buffer ETFs Could Offer Peace of Mind
    ETFs

    In Today’s Volatile Markets, Buffer ETFs Could Offer Peace of Mind

    August 9, 2024


    What You Need to Know

    • Such products limit both potential downside losses and upside gains.
    • In July, 289 defined outcome ETFs totaling $41.4 billion in net assets traded in U.S. markets,
    • Innovator and First Trust are the top two buffer ETF providers by assets, according to Morningstar.

    Many investors undoubtedly experienced panic-driven adrenaline rushes Monday as U.S. stocks sold off sharply, with the S&P 500 experiencing its biggest drop in almost two years.

    Even though the index managed a strong rally Thursday, clients aiming to avoid the stress associated with heart-pumping sell-offs may be interested or already in buffer exchange-traded funds, which limit both potential downside losses and upside gains.

    “Buffer ETFs can add ballast to a portfolio. Over the past couple weeks, buffer ETFs have been tested with significant volatility,” Rachel Aguirre, U.S. head for iShares products at BlackRock, told me by email Friday. 

    “These products are delivering a way for investors to step out of cash in their portfolios, providing access to equity growth up to a return cap, while protecting against market drawdowns,” she said.

    BlackRock recently announced a series of buffer ETFs, among the latest addition to an expanding universe of such funds, which have surged in recent years.

    On a Tear

    In July, 289 buffer, or “defined outcome,” ETFs totaling $41.4 billion in net assets traded in U.S. markets, according to Morningstar data. That compares with 221 ETFs and $34.1 billion in assets in January, and 150 funds with nearly $14.3 billion in July 2022.

    In August 2019, there were only 23 buffer ETFs with nearly $1.3 billion in assets, Morningstar reports.

    The growth in buffer ETFs isn’t just a recent phenomenon, although it’s certainly received more headlines in the wake of market volatility, Zachary Evens, Morningstar Research Services manager research analyst, told me Thursday. The growth since 2022 has been driven partly by higher interest rates, he said.

    “The fund managers are able to offer a cap and buffer” that’s appealing to investors,” Evens explained.

    “The market volatility in 2022 brought a lot of investors into this space as they saw their portfolios drop by 20%, maybe even 30% that year, where these products offer them a relatively defined range of outcomes,” Evens added.

    The Secret Sauce

    For investors with a short time horizon or who are risk averse, buffer ETFs are fairly effective at reducing equity market risk while retaining some stock exposure, he noted.

    These funds typically take a long position in a broad index-based fund like the SPDR S&P 500 fund, and also buy and sell options to protect investors from losses up to a certain point, he explained.

    In simple terms, a buffer ETF advertising a 10% downside buffer would result in only a 5% loss for investors if the market dropped by 15%, assuming they hold the fund throughout the designated outcome period. 



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email

    Related Posts

    ‘People Might Be Underestimating Demand For Spot XRP ETFs,’ ETF Expert Says As CME XRP Futures Set Open Interest Record

    August 31, 2025

    not the FTSE 100 or S&P 500)

    August 30, 2025

    Ethereum ETFs Close Out August With $164 Million In Outflows

    August 30, 2025
    Leave A Reply Cancel Reply

    Top Posts

    ‘People Might Be Underestimating Demand For Spot XRP ETFs,’ ETF Expert Says As CME XRP Futures Set Open Interest Record

    August 31, 2025

    The Shifting Landscape of Art Investment and the Rise of Accessibility: The London Art Exchange

    September 11, 2023

    The Unyielding Resilience of the Art Market: A Historical and Contemporary Perspective

    November 19, 2023

    The Evolution of Art and Art Investments: A Historical Perspective on Fruitful Returns and Wealth Management

    August 21, 2023
    Don't Miss
    ETFs

    ‘People Might Be Underestimating Demand For Spot XRP ETFs,’ ETF Expert Says As CME XRP Futures Set Open Interest Record

    August 31, 2025

    Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the…

    SoftBank, Rakuten tap Japan’s booming retail demand for bonds

    August 31, 2025

    Financial advice about living trusts, capital gains and COBRA

    August 31, 2025

    What is Expense Ratio in Mutual Funds? – Money Insights News

    August 31, 2025
    Stay In Touch
    • Facebook
    • Twitter
    • Pinterest
    • Instagram
    • YouTube
    • Vimeo
    EDITOR'S PICK

    The World Will Miss U.S. Investments in Energy RD&D if Trump’s Proposed Cuts Go Through

    August 21, 2025

    Purpose Investments Inc. annonce des distributions de 2025 pour le premier trimestre de Fiducie de prêts spécialisés Purpose

    March 28, 2025

    INDIA BONDS – Les prix des obligations indiennes baissent après le rachat de dette par la RBI et la chute de leurs homologues américaines

    May 15, 2025
    Our Picks

    ‘People Might Be Underestimating Demand For Spot XRP ETFs,’ ETF Expert Says As CME XRP Futures Set Open Interest Record

    August 31, 2025

    SoftBank, Rakuten tap Japan’s booming retail demand for bonds

    August 31, 2025

    Financial advice about living trusts, capital gains and COBRA

    August 31, 2025
    Most Popular

    🔥Juve target Chukwuemeka, Inter raise funds, Elmas bid in play 🤑

    August 20, 2025

    ₹10,000 monthly SIP in this debt mutual fund has grown to over ₹70 lakh in 23 years

    June 13, 2025

    ₹1 lakh investment in these 2 ELSS mutual funds at launch would have grown to over ₹5 lakh. Check details

    April 25, 2025
    © 2025 Fund Focus News
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.