Fund manager First Trust launches European exchange-traded fund (ETF) focused on volatility mitigation
In a move to cater to the growing demand for active management and risk mitigation, the US-based asset management firm First Trust has launched the First Trust Vest U.S. Equity Buffer UCITS ETF - July (FJUL) on the London Stock Exchange. This European ETF is designed to track the performance of the S&P 500 Index, offering a unique buffer against losses and potential upside gains.
The FJUL aims to provide a more predictable risk/return profile by combining equity exposure with embedded protective features. It is the third ETF in First Trust's series of scheduled UCITS ETFs for their S&P 500® Target Outcome 10% buffer suite. The buffer of the FJUL fund is designed to smooth out market volatility, offering more stable returns.
The ETF, which will be available for trading on the Deutsche Börse Xetra from 22nd July, offers a defined downside buffer protecting the first 10% of losses each year. This downside protection is implemented through the fund’s investment in FLEX options, allowing it to limit losses in the S&P 500's performance up to that 10% buffer, while still allowing participation in upside gains, but only up to a certain capped level.
Rupert Haddon, Managing Director at First Trust Global Portfolios, expressed excitement about launching another innovative buffer strategy for European investors. He stated, "In today's volatile market, innovation is essential."
The FJUL is heavily exposed to the 'Magnificent 7' technology stocks in the S&P 500 Index, making it an attractive investment for those seeking exposure to leading US tech companies. The outcome period for this fund runs until July 2026, and after that, the cap and buffer will be reset based on prevailing market conditions.
The FJUL has a perpetual structure, making it a potential buy-and-hold investment opportunity. It offers a solution for investors aiming for targeted outcomes amid uncertainty by providing exposure to leading S&P 500® companies while helping to manage downside risk.
The UCITS fund is a type of mutual fund that complies with European Commission regulations, ensuring a high level of investor protection. The FJUL is the latest addition to First Trust's expanding suite of Target Outcome ETFs in the UCITS format.
Investors are showing interest in active management amid geopolitical volatility, according to Schroders. The FJUL, with its innovative buffer strategy, is set to cater to this growing demand.
[1] First Trust Global Portfolios. (2021). First Trust Vest U.S. Equity Buffer UCITS ETF - July (FJUL). Retrieved from https://www.firsttrustetfs.com/uk/uk-products/equity/us-equity-buffer-ucits-etf-july-fjul [4] First Trust Global Portfolios. (2021). S&P 500® Target Outcome 10% Buffer UCITS ETFs. Retrieved from https://www.firsttrustetfs.com/uk/uk-products/equity/s-p-500-target-outcome-10-buffer-ucits-etfs
- The First Trust Vest U.S. Equity Buffer UCITS ETF - July (FJUL) is a new offering from First Trust Global Portfolios, designed to cater to the growing demand for active management and risk mitigation. It follows regulation set by the European Commission as a UCITS fund, providing a high level of investor protection.
- To address the increasing interest in active management amid geopolitical volatility, First Trust Global Portfolios has introduced the FJUL, an innovative buffer strategy ETF. This ETF, heavily exposed to technology stocks in the S&P 500 Index, aims to provide a more predictable risk/return profile through asset management and technology, focusing on managing downside risk while offering potential upside gains.
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