Buffer exchange-traded funds (ETFs) are gaining traction among conservative investors aiming to mitigate downside risks while maintaining exposure to equities. These ETFs cap upside potential in exchange for limiting downside losses, drawing parallels to covered-call ETFs. While they can effectively shield against losses during market downturns, they also impose opportunity costs, especially if the market experiences significant growth. Major players like BlackRock are entering this space to cater to the rising demand, making buffer ETFs a viable alternative to traditional stock, bond, and cash investments.
Buffer ETFs cap upside potential to provide downside protection, appealing to conservative investors wary of market risks in uncertain economic climates.
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