First Trust Advisors L.P. has launched the September Enhance & Moderate Buffer ETF Series of Target Outcome ETFs: the FT Cboe Vest U.S. Equity Enhance & Moderate Buffer ETF–September (Cboe: XSEP).
The firm writes that the fund is the latest addition to First Trust’s suite of Target Outcome ETFs with Buffer Strategies, which has USD6.5 billion in total net assets as of 8/31/22 and is among the fastest growing in the outcome-oriented ETFs space.
The fund seeks an outcome that provides investors with returns (before fees and expenses) of approximately twice any positive price return of the SPDR S&P 500 ETF Trust, up to a predetermined upside cap, while providing a buffer against the first 15 per cent of potential SPY losses over a specific Target Outcome Period. The fund is managed and sub-advised by Cboe Vest Financial LLC using a “Target Outcome Strategy” or pre-determined target investment outcome. Cboe Vest is the creator of Target Outcome Investments and manager of the longest running buffer strategy fund.
First Trust believes a buffer against a level of losses can help investors stay invested during volatile times. The firm writes that XSEP offers a way to gain access to outcome-based investing—specifically to buffer against a level of downside risk while allowing enhanced growth to a maximum cap—eliminating bank credit risk in a convenient, flexible investment vehicle.
Jeff Chang, President of Cboe Vest, says: “For some investors, the ability to potentially enhance upside returns is as critical as their need to shield some downside losses. The Enhance & Moderate Buffer ETF Strategy is designed to strike the right balance of a downside buffer and enhanced capped upside in moderately volatile market regimes. We are pleased to work with First Trust to bring the September series to market.”
Karan Sood, CEO, and Howard Rubin, Managing Director, Head of Portfolio Management, of Cboe Vest, will serve as a portfolio managers for the funds. The portfolio managers are jointly and primarily responsible for the day-to-day management of the funds.