First Trust Adds Laddered Nasdaq-100 Buffer ETF Strategy

Today, First Trust rolled out its second fund offering laddered exposure to its buffered ETFs. The FT Cboe Vest Fund of Nasdaq-100 Buffer ETFs (BUFQ) selects four of the fund’s managed outcome ETFs tied to the Nasdaq-100 Index and holds them in a basket. One of the component ETFs resets in each quarter. 

BUFQ comes with an expense ratio of 1.10% and lists on Cboe Global Markets. 

The new fund is actively managed and seeks capital appreciation as its objective. It will do this by holding four ETFs in the existing FT Cboe Vest family: 

• FT Cboe Vest Nasdaq-100 Buffer ETF – March (QMAR) 
• FT Cboe Vest Nasdaq-100 Buffer ETF – June (QJUN) 
• FT Cboe Vest Nasdaq-100 Buffer ETF – September (QSPT) 

• FT Cboe Vest Nasdaq-100 Buffer ETF – December (QDEC) 

First Trust already offers the FT Cboe Vest Fund of Deep Buffer ETFs (BUFD), which has nearly $430 million in assets under management. The fund, like BUFQ, holds four ETFs, with one scheduled to reset in each quarter. Except while the FT Cboe Vest U.S. Equity Deep Buffer ETFs protect against losses in the SPDR S&P 500 ETF Trust (SPY) price from 5% to 30%, the FT Cboe Vest Nasaq-100 Buffer ETFs protect investors from the first 10% of losses in the Invesco QQQ Trust (QQQ). The overall effect is to create a continuous hedge on the portfolio. 

As with essentially all defined outcome ETFs, BUFQ’s component ETFs all achieve their 10% downside protection by investing in flexible exchange (FLEX) options that are tied to its reference ETF, QQQ.  

Contact Heather Bell at [email protected]