Global X ETFs has announced the launch of its new Defined Outcome UCITS ETF Suite, consisting of ETFs which provide investors with defined levels of downside protection whilst also providing capital growth up to a cap.
This includes the Global X S&P 500 Quarterly Buffer UCITS ETF (SPQB) and the Global X S&P 500 Quarterly Tail Hedge UCITS ETF (SPQH).
The firm writes that after a volatile 2022 defined by geopolitical disruptions as well as high inflation and hawkish central banks around the world, investors are set to face a potentially very different landscape in 2023.
“A strong labour market and wage growth are promising, but they may also extend central banks’ rate hike cycles at a time when investors increasingly worry about a looming recession. Defined outcome strategies, which protect investors against set levels of downside risk in exchange for caps on upside potential, may be particularly appealing to investors repositioning their portfolios amid this uncertainty,” the firm says. “They can help those who are looking to stay invested in broad stock indices and maintain some upside participation while also their lowering equity betas and ensuring an explicit level of protection.”
“Amid continued market volatility and recession fears, many investors are looking to thwart anticipated drawdowns in equity markets and maintain defined levels of risk and reward,” says Rob Oliver, Head of Business Development for Global X ETFs in Europe. “I am thrilled that Global X is demonstrating our commitment to the European market through these new defined outcome strategies, which will provide investors with the tools they need to maintain a smoother ride while staying exposed to US equities.”
Global X S&P 500 Quarterly Buffer UCITS ETF (SPQB)
By employing a defined outcome strategy, SPQB aims to absorb the first 5 per cent of losses on the S&P 500 each quarter while also providing capital growth up to a cap. Investors may wish to participate in the growth of the S&P 500, but also seek to limit their risk and equity volatility amid concern over limited selloffs. SPQB seeks to provide investment results that correspond generally to the total return of the Cboe S&P 500 15% WHT Quarterly 5% Buffer Protect Index.
Global X S&P 500 Quarterly Tail Hedge UCITS ETF (SPQH)
By employing a defined outcome strategy, SPQH aims to provide investors with a 9 per cent buffer on the S&P 500, after the first 3 per cent of losses on the index, meaning up to a 12 per cent loss on the index—while also providing capital growth up to a cap. The fund allows investors to participate in the growth of the S&P 500, while also increasing the potential to reduce downside equity, especially in the case of a major market selloff. SPQH seeks to provide investment results that correspond generally to the total return of the Cboe S&P 500 15% WHT Quarterly 9% (-3% to -12%) Buffer Protect Index.