Making Sense of Buffered ETFs

Allianz Investment Management entered the ETF business in 2020 and has grown to more than $3 billion by leveraging its parent company’s background in insurance to develop a suite of buffered ETFs.

In this episode of Exchange Traded Fridays, we talk with Johan Grahn, the asset manager’s head ETF market strategist, about how buffered ETFs work, why they’re growing so rapidly and what type of investors they are best suited for.

Sometimes referred to as “Boomer Candy” because of their growing appeal among people in or near retirement, buffered strategies that offer varying degrees of downside protection in exchange for caps on upside performance are helping risk-averse investors maintain exposure to the equity markets.

As Grahn explains, there is plenty of nuance when it comes to buffered ETFs, but he says investors and financial advisors should not make the mistake of directly comparing them with the underlying indexes on which they are pegged.

Note: Exchange Traded Fridays podcasts will take a brief break beginning Aug. 9, returning Sept. 6, 2024. Stay tuned!