FT Cboe Vest U.S. Equity Buffer UCITS ETF – Apr

Issuer: First Trust

Asset Class: Equity

TER: 50bps

Trading Currency: USD

Pays Income: False

Listing Date: 23 Apr 2025

Ticker: FAPR

ISIN: IE000WX2HZQ7

This actively managed fund offers a defined outcome strategy tied to the performance of a major U.S. equity market portfolio, specifically the SPDR S&P 500 ETF Trust. The investment objective is to provide returns that mirror the price appreciation of the underlying portfolio, up to a predetermined cap, while simultaneously offering a shield against the first 15% of losses. This is achieved over a specific one-year period, known as the Target Outcome Period, which resets annually in April. To construct this specific risk-return profile, the fund primarily utilizes Flexible Exchange (FLEX) Options, which are customizable options contracts on the underlying portfolio.

The strategy is designed for investors who desire participation in the potential upside of the U.S. equity market but are also cautious about downside risk. By accepting a cap on potential gains, investors receive a significant buffer against initial market declines. It is crucial to understand that these defined outcomes—the cap and the buffer—are calculated before fund expenses and are most effective for those who hold their shares for the entire one-year outcome period. Investors purchasing shares after the period has begun will have a different cap and buffer, depending on the market's performance since the start date. This makes the fund suitable for those with a one-year investment horizon who are looking to manage volatility.

Each year, the fund resets its cap and buffer based on prevailing market conditions, such as interest rates and implied volatility. This means the level of upside participation and downside protection can change from one year to the next. The buffer is not absolute; if the underlying portfolio's losses exceed 15% during the period, the investor will be exposed to any further declines. This investment tool provides a more predictable equity investing experience, allowing for strategic portfolio positioning to navigate market uncertainty without entirely exiting equities. It offers a middle ground between full market exposure and holding cash.