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Stuart Chaussee
Stuart Chaussee

All about buffer ETFs 

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In January this year, global data and business intelligence platform, Statista reported that there are now more than 8000 ETFs worldwide – and that the number of ETFs has grown by 3000 per cent since 2003.

Adviser, Stuart Chaussée has recently been studying one type in particular – the buffer ETF. In brief, these ETFs, also known as defined-outcome or target ETFs, limit losses and put a cap on the upside. 

Buffer ETFs had piqued his interest for a while: “I’d been tracking them since 2020,” Chaussée explains. He then decided to explore them in more depth, which resulted in his latest book:   Investor’s Guide to Buffer ETFs: Upside Growth Potential with Downside Protection:

“Although it is an asset class which has attracted more than USD35 billion (as at 29 February 2024), there was a lack of information available about buffer ETFs. I wanted to learn more about them for myself, but also to help advisers and investors find out more about these products. 

The free e-book, which was published in May, is Chaussée’s sixth, following Advanced Portfolio Management; Stocks, Bonds and Greenspan’s Model; Dividend Investing for Income and Growth; Advanced Portfolio Management: Strategies for the Affluent; and Understanding Risk, Investor Behavior and Surviving Bubbles

Chaussée, who has a BA from the University of California and a master’s degree from the Thunderbird School of Global Management, began his career as an adviser in 1986 with Prudential-Bache Securities in Brussels. He continued to work in Europe, for Merrill Lynch, in Luxembourg and Belgium, before returning to the US in 1996.

In 1997, he founded his company, Stuart Chaussée and Associates, which is based in Palos Verdes, California. To date, assets under management total around USD380 million:

“It’s the only job I’ve ever done,” he confirms, reflecting on his 38-year career in financial advice. He’s keeping the business in the family, having recently hired his youngest son. Henry Chaussée has a masters degree in financial planning, passed his CFP certification exam in 2023 and helps with all aspects of investment management and financial planning at the firm. 

“Most of my clients are nearing retirement or are already retired and want to avoid the effects of deep drawdowns in their portfolios. The primary attraction of buffer ETFs is that they greatly reduce the likelihood of losing a lot of money.

“They have a defined outcome when you buy them, unlike pretty much any other, at least equity-related investment that you can buy. With the latter, you don’t know how they’re going to perform or how much money you could lose. But with buffered ETFs, you know the upside and the downside, and generally the risk/reward parameters are pretty attractive.”

Chaussée doesn’t have any plans for other books at the moment, but he doesn’t rule out the possibility of writing more in the future: “Maybe there will be a follow up on this one, if buffer ETFs gain more traction,” he says, adding: “I’m pretty confident they will, as more and more investors learn about them and their advantages.”

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