FT Cboe Vest Nasdaq-100 Moderate Buffer ETF - December
| Issuer: First Trust |
| Asset Class: Risk-Controlled |
| TER: 50bps |
| Trading Currency: USD |
| Pays Income: False |
| Listing Date: 23 Dec 2024 |
| Ticker: QDEC |
| ISIN: IE000GAKWFA7 |
This investment product offers a unique approach for investors looking to participate in the growth potential of the Nasdaq-100 Index while managing downside risk. It is structured to provide a buffer against the first 15% of losses in the reference index over a predefined one-year period, known as the Outcome Period. In exchange for this protection, there is a cap on the potential upside returns. This defined outcome structure aims to provide a clear risk-reward profile, appealing to those who want exposure to technology and growth-oriented companies but are wary of market volatility and potential corrections. The strategy is designed for investors who hold the shares for the entire duration of the Outcome Period to realize the intended buffered protection and capped return.
The fund achieves its investment objective by primarily investing in a portfolio of Flexible Exchange® Options (FLEX® Options) on its reference index. This options-based strategy is actively managed to create the specific return profile—matching the index's upside to the cap and providing the buffer against declines. It’s important for investors to note that the buffer and cap levels are established at the beginning of each annual Outcome Period. If shares are purchased after the period begins, the remaining cap and buffer will be different, depending on the performance of the reference index since the period's start. This structure allows for a level of predictability in potential outcomes, distinguishing it from traditional index-tracking funds.
This product is particularly suitable for individuals with a moderate risk tolerance who are seeking to reduce volatility within their equity allocation. It can serve as a core holding for those who are cautiously optimistic about the market but want a built-in safety net against moderate downturns. By providing a predefined level of protection, it may help investors remain invested through uncertain market conditions, avoiding the potential pitfalls of market timing. It's an innovative tool for building portfolios that balance growth objectives with risk management, offering a more controlled way to access the dynamic but often volatile technology sector.
