Transparent Protection: How Buffered ETFs Change the Investment Game

The investment world has long been divided between growth-seeking equity exposure and safer, income-producing alternatives. But what if you could bridge this gap with a strategy that offers downside protection while maintaining meaningful upside potential? Enter buffered ETFs – innovative investment vehicles that are challenging traditional risk management approaches.

Buffered ETFs represent a transparent alternative to insurance-based products like fixed index annuities, providing defined downside protection over specific outcome periods while capturing a significant portion of market gains. Unlike annuities with surrender charges and opaque fee structures, these ETFs offer daily liquidity, clear parameters, and superior tax efficiency through potential long-term capital gains treatment rather than ordinary income taxation.

The mechanics behind these products are surprisingly straightforward. Using a three-part options strategy, buffered ETFs purchase deep in-the-money calls for upside exposure, implement put spreads for downside protection, and sell calls at the precise level needed to fund the protection – all while maximizing potential returns. This elegant structure ensures investors receive the highest possible cap rates without hidden fees or marketing gimmicks.

Perhaps most valuable is how buffered ETFs address the behavioral challenges that plague many investors. By defining the maximum potential loss, these products help investors stay the course through market turbulence rather than selling at precisely the wrong time. For conservative investors who might otherwise retreat to cash or low-yield fixed income, buffered ETFs offer a bridge to equity market participation with a risk profile they can tolerate.

In today's uncertain environment, particularly with concerns about tariffs and their unpredictable economic impact, buffered ETFs provide a structured way to prepare portfolios for various outcomes. They're especially compelling for tax-sensitive investors seeking defined risk parameters while maintaining equity exposure.


Guest: Tim Urbanowicz, CFA.
LinkedIn: https://www.linkedin.com/in/tim-urbanowicz/

Find Du Charme Wealth Management here:
https://ducharmewealth.com/contact-us/

Phone: 435-288-3396
Address: 50 East 100 South, Suite 300
St. George, UT 84770

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Address: 2665 S Moorland Road, Suite 212
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[00:00:00] Intro.
[00:03:57] How Buffered ETFs Are Built.
[00:08:15] Tax Efficiency vs. Annuities.
[00:15:40] Overcoming Behavioral Investment Biases.
[00:23:21] Market Outlook and Tariff Considerations.
[00:29:46] Final Thoughts and Considerations.

DISCLAIMER:
Information presented on this program is believed to be factual and up-to-date, but we do not guarantee its accuracy, and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Encompass More Asset Management LLC is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC) and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.