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Market Anxiety? Protect Your Portfolio with Zero-Loss ETFs
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Global markets plunged on Monday after a weaker-than-expected July jobs report intensified fears of a hard landing. Amid rising economic and political uncertainties, market volatility is likely to persist in the coming months.
Defined outcome, or "buffer," ETFs employ derivatives to offer investors participation in market upside, up to a cap, while mitigating downside risk. These funds have surged in popularity, with assets under management reaching nearly $50 billion.
These products typically invest in a basket of FLEX options with varying strike prices. The strategy involves purchasing call options for index exposure and put options for downside protection, offsetting costs by selling call options to cap upside returns.
Innovator introduced the world's first 100% protected ETF, the Innovator Equity Defined Protection ETF - 2 Yr to July 2025 (TJUL) , last year. The iShares Large Cap Max Buffer Jun ETF (MAXJ) , launched in June, is now the cheapest option in the space.
Record-high short-term interest rates have boosted the appeal of protection strategies due to higher potential caps. However, with the Fed expected to begin rate cuts later this year, investors have a timely opportunity to lock in attractive upside potential.
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, the SPDR S&P 500 ETF (SPY - Free Report) has returned a little over 10% annualized. The Nasdaq 100 ETF (QQQ - Free Report) has produced almost a 19% average annual return over the past 10 years.
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.
To learn more, please watch the short video above.
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Market Anxiety? Protect Your Portfolio with Zero-Loss ETFs
Global markets plunged on Monday after a weaker-than-expected July jobs report intensified fears of a hard landing. Amid rising economic and political uncertainties, market volatility is likely to persist in the coming months.
Defined outcome, or "buffer," ETFs employ derivatives to offer investors participation in market upside, up to a cap, while mitigating downside risk. These funds have surged in popularity, with assets under management reaching nearly $50 billion.
These products typically invest in a basket of FLEX options with varying strike prices. The strategy involves purchasing call options for index exposure and put options for downside protection, offsetting costs by selling call options to cap upside returns.
Innovator introduced the world's first 100% protected ETF, the Innovator Equity Defined Protection ETF - 2 Yr to July 2025 (TJUL) , last year. The iShares Large Cap Max Buffer Jun ETF (MAXJ) , launched in June, is now the cheapest option in the space.
Record-high short-term interest rates have boosted the appeal of protection strategies due to higher potential caps. However, with the Fed expected to begin rate cuts later this year, investors have a timely opportunity to lock in attractive upside potential.
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, the SPDR S&P 500 ETF (SPY - Free Report) has returned a little over 10% annualized. The Nasdaq 100 ETF (QQQ - Free Report) has produced almost a 19% average annual return over the past 10 years.
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.
To learn more, please watch the short video above.