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New Stock ETFs Offering ‘100%’ Downside Protection Are Coming
I did not add to MAXJ after the starting position when it occurred to me that subsequent share creation when equity prospects are lower can lower the final outcomes for earlier investors. The manager has no incentive to protect earlier investors. He would only be interested in increasing AUM. Are there any guardrails against this agency issue?
"The trend to attract doctors, lawyers, business owners — or anyone with seven- or eight-figure fortunes — has been gaining velocity as the usual hedge fund clientele of big institutions and the ultra-wealthy become more reticent."
an advisor friend of mine was talking about how great these buffer products were for their clients. They use innovators but I'm like the outcomes since these became things have been awful. the 2020's have given us +18/+29/-18/+26/+25 market returns. This completely obliterates the return profiles of defined income and buffered ETF's. anything with floor/caps.
These seem reasonable to an investor IMO because they don't realize the market doesn't fall into these buffer zones as much as they think they do. When you see the market returns 9% historically, its easy to assume that most years fall in that range but they don't. its like 33% of all years are in the typical floor/cap returns (-10% to 15%) and like 60% of them are in the above 15%.
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https://www.bloomberg.com/news/articles/2024-12-10/hedge-funds-chase-dumb-money-by-targeting-mini-millionaires
"The trend to attract doctors, lawyers, business owners — or anyone with seven- or eight-figure fortunes — has been gaining velocity as the usual hedge fund clientele of big institutions and the ultra-wealthy become more reticent."
https://finance.yahoo.com/news/uconn-endowment-abandoning-hedge-funds-123026517.html
These seem reasonable to an investor IMO because they don't realize the market doesn't fall into these buffer zones as much as they think they do. When you see the market returns 9% historically, its easy to assume that most years fall in that range but they don't. its like 33% of all years are in the typical floor/cap returns (-10% to 15%) and like 60% of them are in the above 15%.