I see that fund companies are now starting to offer (or already offering) "downside protection" funds, which are typically tied to an index (S&P) and limit potential upside in exchange for a guarantee of 0% (or some other percentage) downside protection in bear markets.
These would likely be attractive to retirees who want market exposure but cannot stomach or risk capital. Some "indexed annuities" attempt to offer this, too, but such annuities come with hefty fees.
iShares (Blackrock) offers these downside protection funds:
https://www.blackrock.com/us/financial- ... uffer-etfs
Plenty of others do, too, as here:
https://www.innovatoretfs.com/protect/? ... mgQAvD_BwE
Sometimes these are called "buffer funds."
These funds no doubt arose out of the bitter medicine investors of traditional stock/bond portfolios took in 2022, when both stocks and bonds went down substantially. Blackrock says as much:
"As many investors experienced first-hand in 2022, simply diversifying across stocks and bonds may not provide enough risk mitigation against changing market conditions. But at the same time, sitting on the sidelines in cash or trying to time the markets can prevent investors from achieving their financial goals."
Anyone have any experience with these funds? What are the gotchas, other than slightly higher ERs and the upside limitations? Worth considering?
These would likely be attractive to retirees who want market exposure but cannot stomach or risk capital. Some "indexed annuities" attempt to offer this, too, but such annuities come with hefty fees.
iShares (Blackrock) offers these downside protection funds:
https://www.blackrock.com/us/financial- ... uffer-etfs
Plenty of others do, too, as here:
https://www.innovatoretfs.com/protect/? ... mgQAvD_BwE
Sometimes these are called "buffer funds."
These funds no doubt arose out of the bitter medicine investors of traditional stock/bond portfolios took in 2022, when both stocks and bonds went down substantially. Blackrock says as much:
"As many investors experienced first-hand in 2022, simply diversifying across stocks and bonds may not provide enough risk mitigation against changing market conditions. But at the same time, sitting on the sidelines in cash or trying to time the markets can prevent investors from achieving their financial goals."
Anyone have any experience with these funds? What are the gotchas, other than slightly higher ERs and the upside limitations? Worth considering?
Statistics: Posted by Claudia Whitten — Thu Sep 12, 2024 12:47 pm — Replies 0 — Views 92