Frequently asked questions

A buffered ETF (also called a defined outcome ETF) is an investment designed to provide a set level of downside protection in exchange for limiting upside returns through a cap. These products use options to create a defined range of outcomes over a set outcome period, usually one year.

It ranks buffered ETFs on their current risk/reward profile rather than the original terms offered when each fund launched. Because a buffered ETF's characteristics change as markets move, the site evaluates how attractive each fund looks today for a new investor buying at the current price.

The original buffer and cap only describe the ETF at launch. Once the market moves, the protection and upside available to a new investor can be very different.

• A 15% buffer ETF trading 5% above its issue price still has a 15% buffer, but a buyer today has 5% of unprotected downside before the buffer begins.
• A 15% buffer ETF trading 5% below its issue price has only about 10% of buffer left, but its remaining upside may be larger than at launch.

The website adjusts for these changes automatically.

Both describe the downside protection available from today's price. The card says Buffer Available when the fund trades at or above its issue price, because the whole buffer is still intact. It says Buffer Remaining when the fund trades below its issue price, because part of the buffer has already been used.

• Original buffer 15%
• ETF trades 5% below issue price
• Buffer Remaining is about 10%

Current Cap is the maximum remaining gain from today's price to the end of the outcome period.

• Original cap 12%
• ETF trades 5% above issue price
• Current Cap is about 7%

Because some of the upside has already happened, less remains for a new investor. The reverse is also true: a fund that has fallen can have a Current Cap larger than its original cap.

How far the fund can fall from today's price before the buffer starts protecting you. It is 0% when the fund already trades at or below its issue price. For a fund trading 3% above its issue price it is about 3%: a buyer today absorbs that first 3% of any decline.

A few products have a gap by design, such as Innovator's Ultra Buffer and First Trust's Deep Buffer funds, where protection starts only after a 5% loss. That gap shows up here too.

How far the reference index can fall from today's level before someone buying the fund at today's price would lose money at the end of the outcome period, after the remaining fees. It matters most for funds that have risen well above their issue price: the fund's own price can fall several percent before the buffer engages, yet a buyer today may have only a percent or two of cushion before an actual loss.

"Index must rise" means today's price is above what the fund would pay if the index finished at today's level, so the index has to gain that much for a buyer to break even. "Full" means a buyer today cannot lose at the end of the period. "None" means today's price is above the most the fund can pay at its cap, so a buyer today cannot break even. "N/A" means the index level at the start of the fund's period is not available yet. The figure uses the index level from the day before the period began and today's index price, and it is shown for information only; it is not part of the score.

The dollar value of the fund's shares traded on exchanges in a normal day: the median over the last three months of daily volume times the closing price, from Yahoo Finance, refreshed with the prices each day. It is shown for information only and is not part of the score. Hover over the figure for the share count and an order-handling note.

Monthly-series buffered ETFs are often small, and a large order can take time to fill. Issuers recommend limit orders for all of them, placed away from the first and last 15 minutes of trading. Below $100K a day the card adds "Work the order": a larger ticket may exceed a normal day's volume, so use a limit order or ask the issuer's capital-markets desk or your custodian's block desk for a block. Shares of these funds are created against the options they hold, so low exchange volume means an order needs handling, not that the fund cannot be traded; the figure reflects shares traded on exchanges, not the fund's underlying liquidity.

The fund has fallen below its issue price since the outcome period began, so part of its buffer is already in use. These funds often score well, because there is no loss before the buffer from today's price and the remaining cap can be large. The tag is there so you notice that the protection left is smaller than the fund's headline buffer. Hover over it for the exact figures.

The fund's price has already reached its cap level. Little or no upside remains for the rest of the outcome period, and a new buyer would take on downside risk without meaningful upside. These funds are flagged on the card and score near zero on Upside. For a current holder they are candidates for review or replacement.

After fees. Every cap and buffer on the site is shown net of each fund's expenses for its outcome period. Some issuers advertise headline figures before fees, for example a "100% buffer" that is 99.3% after a 0.69% fee, so the site's figures can be slightly lower than an issuer's marketing page. Each card shows the fund's expense ratio.

By the protection left today, not the buffer a fund launched with. A fund trading above its issue price still has its whole buffer, so it sits in its headline band. One trading below has used part of its buffer and can drop a band: a 15% fund with 12% left shows under 10–15%. The bands are judged in the issuer's headline terms with a half-point tolerance, so 14.75% counts as 15%. 100% protection funds appear only under that option.

The score, from 0 to 10, measures how attractive a fund's current risk/reward profile is compared with other buffered ETFs available today. It combines four parts:

• Upside Potential (40%): how much cap is left, judged against the original cap and against a benchmark for the fund's outcome period.
• Entry Point (30%): how much loss you would take before the buffer kicks in, from today's price.
• Buffer Depth (15%): how much protection the buffer provides.
• Risk/Reward (15%): how much cap the fund offers for its level of protection, ranked against similar funds.

Every card has a "Show score breakdown" button with the four parts and a one-line explanation of each. A higher score does not mean an ETF will outperform.

Not necessarily. A higher score means a more attractive current profile according to the model, but every investor has different goals, risk tolerances, time horizons and portfolio needs. Treat the score as a research tool, not a buy recommendation.

Entry Point measures how favorable today's price is as a starting point. It looks at the loss you would take before the buffer begins. No loss before the buffer scores 10; a gap of 7.5% or more scores 0.

• Buying at or below the issue price: no loss before the buffer, full marks.
• Buying a little above the issue price: a small gap, slightly lower score.
• Buying well above the issue price: a large gap, low score.

The model puts real weight on this because the entry price often has the largest effect on an investor's eventual outcome.

When an ETF trades below its issue price there is no unprotected downside before the buffer begins, the investor enters closer to the protected range, and the remaining upside is often larger than at launch. That combination usually produces a better risk/reward profile than buying the same ETF above its issue price. The trade-off is that part of the buffer has already been used, which is why these funds carry the "In buffer zone" tag.

Risk/Reward measures how much upside a fund offers for each unit of downside protection, compared with similar funds. It takes the remaining cap, measured against the benchmark for the fund's outcome period, and divides it by the fund's buffer. The result is ranked against other funds with a similar buffer on the same index: the best of that group scores 10, the weakest scores 0.

Because each group has its own best fund, several funds on a list can score 10 at the same time. The card shows which group a fund was compared with.

It does not annualize. The remaining cap is judged as it stands against a benchmark for the fund's full outcome period: 5% for a quarterly fund, 10% semi-annual, 20% annual and 35% two-year. A fund late in its period with only a little cap left scores low on Upside however short the time remaining, because the dollar upside for a buyer today is small.

Quarterly and semi-annual funds are left out of the default list and appear when you select a 0 to 6 month outcome period, so that annual funds are compared with annual funds.

A fund with a 100% buffer scores full marks on Buffer Depth by definition, and when it is new it also scores well on Entry Point. Its cap is modest, so it scores lower on Upside. In a general list these funds often sit alongside ordinary 10% to 20% buffer funds, so use the Protection Level filter if you want to compare one group at a time.

Three of the four parts of the score use fixed yardsticks, so a 12% cap on an annual fund scores the same whatever else is on offer. The fourth, Risk/Reward, is relative: it asks whether a fund's cap is good for its level of protection compared with similar funds today. A 12% cap can be excellent when most comparable caps are 10% to 13% and average when competitors offer 15% to 18%. Mixing the two lets the ranking adapt to the market without losing an absolute sense of what is good.

Buffered ETF profiles change continuously because market prices move, buffers are used up or restored, caps shrink or expand, and time remaining falls. The data refreshes from the issuers several times a day, and the rankings move with it.

No. Buffered ETFs still carry investment risk, including:

• Losses beyond the buffer level
• Opportunity cost from the upside cap
• Market risk
• Tracking differences
• Expenses and fees
• Liquidity considerations

They are designed to reduce certain risks, not eliminate them. The stated buffer and cap apply only to shares held for the full outcome period.

No. The score is an analytical measure of the fund's current profile under this website's methodology. It should be considered alongside investment objectives, risk tolerance, time horizon, portfolio construction needs and professional financial advice. This website is a screening tool for financial professionals and does not give investment advice.

Cap, buffer and outcome period figures come from each issuer's own website (First Trust, Innovator, AllianzIM and Calamos) and are refreshed about every four hours. Prices come from Yahoo Finance. The Admin page shows when each source last updated. Data can be delayed, so verify figures against the issuer and the prospectus before acting.