How to Make the Most of Defined Outcome ETFs

Johan Grahn of Allianz Investment Management says defined outcome is not a stock substitute.

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Reviewed by: etf.com Staff
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Edited by: Kent Thune
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In this episode of Advisor Insider, we talk with Johan Grahn, head ETF market strategist at Allianz Investment Management, about one of the hottest areas of the ETF space, buffered strategies that offer downside protection in exchange for caps on performance.

We distinguish buffered ETFs with the fast-growing defined outcome ETFs that are coming to market offering 100% downside protection, meaning investors cannot lose their initial investment as long as they stay invested for the full term of the ETF.

Both buffered ETFs and defined outcome ETFs come with tradeoffs. For instance, investors are paying in the 60-basis point range for ETFs that are pegged to broad indexes that can be had for just a few basis points. Also, investors might be surprised to learn the cost of the insurance protection includes the loss of dividend income.

But, as Grahn explains, it’s important to look beyond the obvious with these ETFs and think of them as bond replacements that can even open doors to some tactical timing strategies.

Join etf.com’s Wealth Management Editor, Jeff Benjamin, and special guests from the ETF industry in discussions that cater to financial advisors seeking a deep dive into the world of investments and portfolio management! Guests will include financial advisors, ETF issuers, and representatives from across the financial services landscape, that will provide a comprehensive perspective on navigating the dynamic world of portfolio management. You can expect to hear industry experts share their insights on strategies, product utilization and the newest concepts shaping today’s wealth management. Tune in for practical wisdom, expert discussions and valuable takeaways to elevate your advisory practice. 

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