Financial advisors are turning to buffered ETFs to provide a smoother investment journey for retirees and cautious investors. These ETFs, which limit downside losses in exchange for capped upside returns, have grown to $70 billion over seven years. Innovations in these products have attracted over $8 billion in investments in the first half of 2025.

Buffered ETFs track broad market indexes like the S&P 500, limiting downside losses and capping upside returns. With maturity dates ranging from months to a year, these ETFs offer a predictable investment option. However, investors must hold the ETF for the full duration to benefit from the guardrails set by issuers.

The rise of buffered ETFs is a response to the increased correlation between traditional stock and bond allocations. Financial advisors and investors are turning to these products for stability and outperformance compared to traditional fixed-income investments. The evolving nature of buffered ETFs requires advisors to stay informed and cautious in their investment choices.

Investors pay a premium for buffered ETFs’ predictable outcomes, with expense ratios around 50 basis points or more. These products offer control over investment destiny and protection from market volatility. While not suitable for investors expecting market growth, buffered ETFs provide confidence and risk management for those seeking stability.

Read more at Yahoo Finance: Can Buffered ETFs Reshape Portfolio Management?