ProShares Debuts 3 New Dynamic Buffer ETFs
- Three new Dynamic Buffer ETFs target daily loss protection up to 5%.
- The funds automatically adjust protection based on market volatility.
- Buffer ETF assets have reached $65 billion industry-wide.
ProShares has launched three Dynamic Buffer exchange-traded funds that aim to protect investors from daily market losses while capturing upside gains, according to a company announcement.
The three new funds—the ProShares S&P 500 Dynamic Buffer ETF (FB), the ProShares Nasdaq-100 Dynamic Buffer ETF (QB) and the ProShares Russell 2000 Dynamic Buffer ETF (RB)—began trading Tuesday with a 0.58% expense ratio each, according to ProShares.
'Breakthrough' Buffer ETFs
The funds represent what ProShares calls a "breakthrough" in buffer ETF design by eliminating the need for investors to hold positions for lengthy predetermined periods, often as long as a year, to obtain protection benefits, according to the announcement.
Each fund uses a patent-pending methodology that adjusts daily protection levels automatically based on expected market volatility, according to the announcement. The funds target protection against the first 1% to 5% of daily losses while allowing participation in gains up to a daily cap.
"We feel confident that the dynamic protection afforded by these new funds will allow investors to rest easier at night and make them more likely to include equity exposure in their portfolios, even during market volatility," said Michael Sapir, CEO of ProShares.
Dynamic Buffer Strategy Targets Daily Reset
The strategy combines long exposure to an underlying index with both long and short options having one day to expiration, according to ProShares. When expected volatility rises, both the protection buffer and upside participation cap increase proportionally.
Buffer ETFs have attracted $65 billion in assets under management, according to Bloomberg data cited in the announcement. Existing buffer funds often produce unexpected outcomes unless held for extended fixed periods, according to ProShares.
The S&P 500 fund tracks 503 holdings with an average market cap of $105.8 billion, according to ProShares. The Nasdaq-100 fund follows 101 companies with an average market cap of $299.1 billion, while the Russell 2000 fund covers 1,929 holdings averaging $1.3 billion in market cap.
ProShares manages over $80 billion in assets, according to the company. The funds trade on Cboe BZX exchange for the S&P 500 and Russell 2000 versions, while the Nasdaq-100 fund lists on Nasdaq.
