Investors who need to balance growth and risk protection now have a new choice in the market. First Trust has listed the FT Vest U.S. Equity Equal Weight Buffer ETF – March (NYSE:RSMR). With an expense ratio of 0.85%, this fund provides structured exposure to U.S. equities while hedging against market declines.
In the wake of increased concerns regarding concentration in the S&P 500 index, particularly the Magnificent Seven dominance, investors have sought alternative means to gain exposure and control risk. RSMR presents a highly attractive option with exposure to the price performance of Invesco S&P 500 Equal Weight ETF Trust (NYSE:RSP) accompanied by a defensive buffer against losses.
Upside Potential With Downside Protection
One of the most appealing aspects of RSMR is that it can replicate the price return of RSP to a limit of 13.86%. While doing so, it also offers a cushion against losses--protecting the initial 10% of RSP’s declines from the beginning of its outcome period.
Yet, note that in the event of a decline in RSP’s price by more than 10%, the fund will lose at the same percentage as RSP after that point. Also, once fees and other expenses are deducted, the true cap stands at approximately 13.01%, and the coverage drops to 9.15%.
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A Different Strategy Using FLEX Options
RSMR mainly invests in FLEX Options, which are structured contracts enabling investors to wager on the performance of the RSP. The options mimic RSP’s performance over a year, allowing investors to tailor crucial features such as pricing and timing.
With more than 160 ETFs traded in the United States, First Trust is a seasoned participant in the ETF market. The introduction of RSMR further illustrates the company’s dedication to delivering innovative investment products that respond to investors’ changing needs.
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