MOST INVESTMENTS TODAY HAVE UNCERTAIN LEVELS of downside risk over an uncertain period of time. Buffer ETFs allow investors to know their potential outcome parameters prior to making a purchase, therefore reducing much of the uncertainty that comes with investing. This produces a number of key benefits for investors in an attractive ETF wrapper:
- Upside potential and downside risk is known prior to investing
- Have a known defined outcome
- Reduce market timing risk
- Remain invested for the long term
- Set your own expectations and outcome parameters
Potential Outcomes
Buffer ETFs allow investors to know their return potential typically over a full one-year outcome period. In the chart you can see various hypothetical return scenarios (before fees) for a Buffer ETF with 15% downside protection and a 15% upside cap.
- Major Selloff – reference asset finishes below the buffer
- Normal Market Correction – reference asset finishes within the buffer
- Growth – reference asset finishes beneath the upside cap
- High Growth – reference asset finishes above the upside cap
