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In this episode of ETF Spotlight, I speak with Matt Kaufman, Head of ETFs at Calamos, about Structured Protection ETFs, which allow investors to gain exposure to stock markets while protecting against downside risks.
The Calamos S&P 500 Structured Alt Protection ETF (CPSM - Free Report) aims to match the return of the SPDR S&P 500 ETF Trust (SPY - Free Report) up to a cap while promising 100% downside protection against the index’s losses over a one-year outcome period.
The Calamos Nasdaq-100 Structured Alt Protection ETF (CPNJ) provides protected exposure to the Nasdaq-100 index (QQQ - Free Report) . Calamos plans to roll out new ETFs every month.
Like other buffer ETFs, these products invest in a basket of FLEX options with varying strike prices. The strategy involves buying call options to gain index exposure and put options for downside protection, then offsetting the costs by selling call options, which caps upside returns.
Investors should remember that stocks tend to go up over the long term and that they should generally ignore short-term noise. Since its inception in January 1993, SPY has returned about 10.3% annualized. By seeking downside protection, investors forgo any potential upside beyond the cap.
At the same time, many risk-averse investors, particularly those in or nearing retirement, have been reluctant to buy stocks. There is a tremendous amount of cash sitting on the sidelines.
Some invest in products like fixed indexed annuities and market-linked CDs that protect against downside risks but come with much higher fees, high investment minimums, long lockup periods, and unfavorable tax treatment. Protection ETFs are a much better option for such investors.
The Innovator Equity Defined Protection ETF (TJUL - Free Report) , which provides 100% downside protection over a two-year outcome period, has gathered $220 million since launching in July last year.
Tune in to the podcast to learn more.
Make sure to be on the lookout for the next edition of the ETF Spotlight and remember to subscribe! If you have any comments or questions, please email podcast@zacks.com.
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Should You Buy ETFs with 100% Loss Protection?
In this episode of ETF Spotlight, I speak with Matt Kaufman, Head of ETFs at Calamos, about Structured Protection ETFs, which allow investors to gain exposure to stock markets while protecting against downside risks.
The Calamos S&P 500 Structured Alt Protection ETF (CPSM - Free Report) aims to match the return of the SPDR S&P 500 ETF Trust (SPY - Free Report) up to a cap while promising 100% downside protection against the index’s losses over a one-year outcome period.
The Calamos Nasdaq-100 Structured Alt Protection ETF (CPNJ) provides protected exposure to the Nasdaq-100 index (QQQ - Free Report) . Calamos plans to roll out new ETFs every month.
Like other buffer ETFs, these products invest in a basket of FLEX options with varying strike prices. The strategy involves buying call options to gain index exposure and put options for downside protection, then offsetting the costs by selling call options, which caps upside returns.
Investors should remember that stocks tend to go up over the long term and that they should generally ignore short-term noise. Since its inception in January 1993, SPY has returned about 10.3% annualized. By seeking downside protection, investors forgo any potential upside beyond the cap.
At the same time, many risk-averse investors, particularly those in or nearing retirement, have been reluctant to buy stocks. There is a tremendous amount of cash sitting on the sidelines.
Some invest in products like fixed indexed annuities and market-linked CDs that protect against downside risks but come with much higher fees, high investment minimums, long lockup periods, and unfavorable tax treatment. Protection ETFs are a much better option for such investors.
The Innovator Equity Defined Protection ETF (TJUL - Free Report) , which provides 100% downside protection over a two-year outcome period, has gathered $220 million since launching in July last year.
Tune in to the podcast to learn more.
Make sure to be on the lookout for the next edition of the ETF Spotlight and remember to subscribe! If you have any comments or questions, please email podcast@zacks.com.