Defined Outcome ETFs: Good For Conservative Investors, Not Conservative Investments

2025-03-07 23:05:00 ET

Summary

• Defined outcome ETFs use options to set a floor or 'buffer' to the downside by reducing potential upside, over a specified period, usually one or two years.
• We believe defined outcome strategies applied to volatile markets may actually produce more optimal results because the upside cap can be much higher with the same levels of protection available on straightforward S&P 500 strategies.
• Based on current options pricing, our defined outcome strategies for China Internet offer twice as much upside potential compared to applying a similar strategy with the S&P 500 Index as the underlying asset.

Introduction

All investors want to maximize returns while limiting loss. This is the allure of defined outcome ETFs: the ability to secure a specific potential return and a defined potential loss. Their popularity is evidenced by the growth in assets under management ((AUM)), which reached $58 billion in 2024. ¹ ...

Read the full article on Seeking Alpha

For further details see: