Competing Laddered Buffer ETFs Debut

Today, First Trust and Innovator ETFs each unveiled their own versions of laddered defined outcome ETFs that invest in their own existing ETFs, and there are some key differences between the two. While the FT Cboe Vest Fund of Buffer ETFs (BUFR) is a brand-new fund, the Innovator Laddered Fund of S&P 500 Power Buffer ETFs (BUFF) is a renovation of the Lunt Low Vol/High Beta Tactical ETF (LVHB) with a new name, ticker and index.

BUFR comes with an expense ratio of 1.05%, and BUFF charges a total expense ratio of 0.99%. Both ETFs list on Cboe Global Markets, the parent company of ETF.com.

Dueling ETFs

Actively managed BUFR will invest in four of the existing FT Cboe Vest U.S. Equity Buffer ETFs, with one of the four to be scheduled to reset each quarter. The individual funds invest in FLEX options on the SPDR S&P 500 ETF Trust (SPY) and protect against the first 10% of losses during the outcome period. The prospectus does not detail which funds in First Trust’s lineup of Equity Buffer ETFs would be used, but currently it has six that protect against losses of up to 10%:

• FT Cboe Vest U.S. Equity Buffer ETF - February (FFEB)
• FT Cboe Vest U.S. Equity Buffer ETF - May (FMAY)
• FT Cboe Vest U.S. Equity Buffer ETF - June (FJUN)
• FT Cboe Vest U.S. Equity Buffer ETF - July (FJUL)
• FT Cboe Vest U.S. Equity Buffer ETF - August (FAUG)
• FT Cboe Vest U.S. Equity Buffer ETF - November (FNOV)

BUFF in contrast will invest in the 12 existing Innovator Power Buffer ETFs, one for each month of the calendar year, which protect against the first 15% of losses during the outcome period. The ETF tracks the Refinitiv Laddered Power Buffer Strategy Index, which comprises the following ETFs:        

• Innovator S&P 500 Power Buffer ETF — January (PJAN)
• Innovator S&P 500 Power Buffer ETF — February (PFEB)
• Innovator S&P 500 Power Buffer ETF — March (PMAR)
• Innovator S&P 500 Power Buffer ETF — April (PAPR)
• Innovator S&P 500 Power Buffer ETF — May (PMAY)
• Innovator S&P 500 Power Buffer ETF — June (PJUN)
• Innovator S&P 500 Power Buffer ETF — July (PJUL)
• Innovator S&P 500 Power Buffer ETF — August (PAUG)
• Innovator S&P 500 Power Buffer ETF — September (PSEP)
• Innovator S&P 500 Power Buffer ETF — October (POCT)
• Innovator S&P 500 Power Buffer ETF — November (PNOV)
• Innovator S&P 500 Power Buffer ETF — December (PDEC)

The Innovator Power Buffer ETFs hold FLEX options on the S&P 500 Price Index.

Contact Heather Bell at [email protected]