iShares Large Cap Max Buffer Jun ETF

MAXJ

Market cap $172M

Jay Jacobs, BlackRock U.S. Head of Equity ETFs, and Roger Hallam, Vanguard global head of rates, share their outlooks for the rest of year, key trends to watch in the ETF space and the strategy behind their firms' latest funds with CNBC's Dominic Chu.

Buffer exchange-traded funds (ETFs) are an intriguing investment instrument that's grown in popularity of late.

Buffer ETFs like the iShares Large Cap Max Buffer June ETF offer investors downside protection and modest upside exposure. The MAXJ ETF uses options to achieve its objective and must be held for the entire "outcome period", typically 1 year, to realize the full benefit of the fund's options. However, with the IVV appreciating considerably since June, I would recommend investors consider the SMAX ETF, which is closer to its hedge level with more upside appreciation room.

iShares Large Cap Max Buffer Jun ETF offers downside protection with capped upside for tech-heavy portfolios. The ETF has reasonable liquidity and AUM, and managed by Blackrock Fund Advisors with a reasonable 0.50% expense ratio. The fund is structured as a 1-year hedge starting on July 1, 2024, providing upside exposure and downside protection for broad-market portfolios in volatile times.

Such 100% buffer ETFs weren't viable when interest rates were close to zero. But with Treasuries yielding about 5% today, you can get a 10% maximum upside cap rate with zero downside.

This week opened with a deluge of 15 new ETFs on Monday, with only a single launch occurring after that. Perhaps the most notable of the debuts was the first buffer ETF from iShares.

BlackRock, has just launched an ETF that offers 100% downside protection to investors.

BlackRock has launched a 'buffer' exchange-traded fund that seeks to offer a 100% downside hedge to risk-shy investors looking to tap the equity markets, the world's largest asset manager said on Monday.