The FT U.S. Equity Deep Buffer ETF October (DOCT) is an exchange-traded fund (ETF) offered by First Trust Advisors. This ETF invests in large-cap U.S. stocks and uses a "buffer" strategy to limit downside risk.
The "buffer" is a mechanism that provides a level of protection to the fund's investors against potential losses. DOCT aims to offer downside protection on the S&P 500 Index by buffering the first 15% of losses in the index over a one-year period, while still allowing investors to participate in the upside of the market.
The fund invests in a portfolio of securities that seeks to track the performance of the CBOE S&P 500 Buffer Protect Index October Series. The index provides a buffer of 15% on the S&P 500 Index for a one-year period beginning in October of each year. This means that if the S&P 500 Index experiences losses of up to 15% over the one-year period, the fund's investors will not experience any losses. However, if losses exceed 15%, the fund will experience those losses to the extent that they exceed the 15% buffer.
The ETF's portfolio is designed to track the index by holding a combination of equity securities, such as stocks, and cash equivalents. The fund's investment strategy is designed to provide investors with a degree of protection against downside risk while still allowing them to participate in the potential upside of the market.
As with any investment, there are risks associated with investing in the DOCT ETF. One key risk is that the buffer protection offered by the ETF may not be sufficient to fully protect investors against market losses. Additionally, there are risks associated with investing in equities, such as market volatility, interest rate changes, and economic uncertainty. Investors should carefully consider these risks before investing in the DOCT ETF.
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