Unveiling the Secrets Behind Structured Protection ETFs: CPSM, TJUL, AAPR, AJAN

In the latest episode of ETF Spotlight, Matt Kaufman, Head of ETFs at Calamos, discusses the launch of Structured Protection ETFs and the advantages of investing in these innovative products.

The Calamos S&P 500 Structured Alt Protection ETF (CPSM) is designed to provide investors with exposure to the stock market while protecting against downside risks. This ETF aims to match the return of the SPDR S&P 500 ETF Trust (SPY) up to a cap, while offering 100% downside protection against the index’s losses over a one-year outcome period.

Structured Protection ETFs, like CPSM, invest in a basket of FLEX options with varying strike prices. The strategy involves buying call options for index exposure and put options for downside protection, then offsetting costs by selling call options to cap upside returns.

Investors seeking downside protection may find these products appealing, especially those who are risk-averse or nearing retirement. While stocks historically provide long-term growth, protection ETFs offer a way to mitigate downside risks without sacrificing potential upside beyond the cap.

Compared to other products like fixed indexed annuities and market-linked CDs, which come with higher fees, investment minimums, and tax implications, Structured Protection ETFs offer a more cost-effective and flexible solution for investors looking to safeguard their portfolios.

The Innovator Equity Defined Protection ETF TJUL, which provides 100% downside protection over a two-year outcome period, has seen significant interest since its launch in July last year, with $220 million in assets under management.

Overall, Structured Protection ETFs like CPSM and TJUL provide investors with a unique opportunity to participate in the market while managing downside risks effectively. As the market continues to evolve, these innovative products may become an essential component of many investors’ portfolios.

For more insights on Structured Protection ETFs and other investment opportunities, be sure to tune in to the next edition of ETF Spotlight and subscribe to stay updated. If you have any questions or comments, feel free to reach out to podcast@zacks.com.

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