 The
FT Buffered Allocation Growth ETF (BUFG) is an actively managed
exchange-traded fund (ETF) that seeks to provide capital appreciation
with a secondary focus on capital preservation. The fund invests in a
diversified mix of underlying ETFs and fixed-income securities with
the aim of providing investors with market exposure while limiting
downside risk through a buffered investment strategy.
The BUFG
ETF aims to maintain a target allocation of 75% to 100% in equity ETFs
and a target allocation of 0% to 25% in fixed-income ETFs or cash
equivalents. The equity portion of the portfolio will be diversified
across various sectors and geographies, while the fixed-income portion
of the portfolio will be invested in a diversified mix of
investment-grade fixed-income ETFs.
The fund uses a buffered
investment strategy that seeks to limit downside risk by investing in
put options on the S&P 500 Index. The put options provide a level of
downside protection, allowing the fund to participate in the upside
potential of the market while mitigating losses in the event of a
market downturn. The level of downside protection is determined by the
buffer percentage, which represents the amount of decline the fund is
designed to absorb before the put options begin to provide protection.
BUFG is managed by First Trust Advisors, a leading provider of
ETFs and mutual funds. The fund has an expense ratio of 0.75% and is
traded on the NYSE Arca exchange. BUFG is a relatively new fund,
having been launched in October 2021.
As with any investment,
it's important to carefully consider the risks and potential rewards
before investing in the FT Buffered Allocation Growth ETF. While the
buffered investment strategy can help limit downside risk, it's
important to note that there is no guarantee that the fund will
achieve its investment objectives, and investors may still experience
losses. Additionally, the use of derivatives such as put options can
add complexity and increase risk to the fund. Investors should
carefully review the fund's prospectus and consult with their
financial advisor before making any investment decisions.
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