"If the exaggerated swings of the stock market are getting you down, cheer up. An expanding array of exchange-traded funds and other tools can limit volatility — for a price.
In the last two years, several dozen so-called defined-outcome E.T.F.s, which blunt the impact of stock market declines by absorbing losses up to a point, have been introduced. To provide this protection, gains are limited, and the funds are intended to work best over a 12-month period.
Financial advisers and fund analysts say these E.T.F.s can be useful for managing swings in a stock portfolio. But they caution that there are limits to the funds’ effectiveness.
“If you’re building up a core position in a more risk-conscious way, these products are worth a look if your plan is to buy and hold them” for a full year, said Todd Rosenbluth, director of E.T.F. and mutual fund research at CFRA Research."
ARTICLE from NY Times
