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First Trust launches the First Trust Vest US Equity Moderate Buffer UCITS ETF: GMAY

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First Trust has launched the First Trust Vest U.S. Equity Moderate Buffer UCITS ETF on the London Stock Exchange, designed to help investors maintain a pre-determined level of 15 per cent downside protection, while also taking advantage of the growth of the S&P 500, up to a cap of 13.51 per cent (12.66 per cent net).

GMAY is the fourth in First Trust’s suite of Target Outcome ETFs in UCITS format. The firm writes that globally the First Trust Target Outcome product line has amassed more than USD19.65 billion in total net assets as of March 2024. Actively managed, GMAY seeks to provide investors with returns that match the price return of the S&P 500, up to a predetermined upside cap, while providing a buffer against potential losses, the firm says.

The Fund’s outcome period runs for approximately one year, ending in May 2025. At the end of the outcome period, the cap and buffer are reset to prevailing market conditions. The Fund has a perpetual structure and may be held indefinitely, providing investors a potential buy and hold investment opportunity.

The Fund is managed by First Trust Advisors L.P. and sub-advised by Vest Financial LLC using a “Target Outcome Strategy” or pre-determined target investment outcome. Vest is the creator of Target Outcome Investments and manager of the longest running buffer strategy fund. The Fund will invest substantially all of its assets in FLexible EXchange Options (“FLEX Options”) on the S&P 500. FLEX Options are customisable exchange-traded option contracts guaranteed for settlement by the Options Clearing Corporation, the firm writes.

The firm writes that the fund offers a way to gain access to outcome-based investing, specifically to protect against a level of downside risk while allowing growth to a maximum cap, whilst eliminating bank credit risk in a convenient, flexible investment vehicle.

Rupert Haddon, Managing Director at First Trust Global Portfolios, says: “For investors, GMAY represents the fourth ETF in our quarterly series of scheduled ETFs for our Target Outcome suite. Mitigating downside risk remains a top concern for many investors, which helps explain the growing popularity of buffered ETFs. The launch of GMAY continues to show our commitment to offering European investors innovative solutions to navigating today’s market.”

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