Should You Invest in Defined Outcome Buffer ETFs?

Should You Invest in Defined Outcome Buffer ETFs?

Buffer ETFs protect against the downside while capping the upside. We examine them closely to see if they are worth it.

Topics covered include:

  • How buffer ETFs are structured and some current examples
  • How buffer ETFs have performed over the past five years
  • What are the risks of buffer ETFs
  • How loss aversion and narrow framing contribute to the popularity of buffer ETFs
  • Are buffer ETFs worth it and what are some alternative strategies that could be used instead


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Show Notes

BlackRock Enters Booming Market for Stock ETFs With a 100% Hedge by Emily Graffeo—Bloomberg

New Stock ETF Offers 100% Hedge as Buffer Funds Nab $46 Billion by Emily Graffeo—Bloomberg

The Dynamics of Defined Outcome Exchange Traded Funds by Luis García-Feijóo and Brian Silverstein—SSRN

Monetizing Loss Aversion for Fun and Profit—Paul Kedrosky

Thirty Years of Prospect Theory in Economics: A Review and Assessment by Nicholas C. Barberis—Journal of Economic Perspectives

Prospect Theory: An Analysis of Decision Under Risk by Daniel Kahneman and Amos Tversk—ECONOMETRICA

Investments Mentioned

Innovator U.S. Equity Ultra Buffer ETF - January Series (UJAN)

Innovator U.S. Equity Ultra Buffer ETF - June Series (UJUN)

iShares Large Cap Max Buffer Jun ETF (MAXJ)

Innovator U.S. Equity Accelerated 9 Buffer ETF (XBJL)

SPDR S&P 500 ETF Trust (SPY)

Related Episodes

465: Transforming Financial Regrets into Portfolio Gains: Five Strategies for Navigating Investment Emotions

460: Should You Be Invested 100% in Stocks Before and During Retirement? A Recent Study Says Yes.

451: How Much Should You Invest in Stocks? The Art of Position Sizing in a Volatile Market

394: How to Get Better at Risk Taking

321: How to Analyze Complex Investments


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