Global X has launched two ETFs aiming to buffer investors from the downside risks of the S&P 500 as part of its defined outcome range.
The Global X S&P 500 Quarterly Buffer UCITS ETF (SPQB) and the Global X S&P 500 Quarterly Tail Hedge UCITS ETF (SPQH) are listed on Deutsche Boerse and the London Stock Exchange with total expense ratios (TERs) of 0.50%.
SPQB tracks the Cboe S&P 500 15% WHT Quarterly 5% Buffer Protect index which aims to absorb the first 5% of losses on the S&P 500 each quarter while also providing capital growth up to a cap.
Global X said the ETF will attempt to participate in the growth of the S&P 500 while also limiting risk and equity volatility during “limited” sell-off periods.
Meanwhile, SPQH will track the Cboe S&P 500 15% WHT Quarterly 9% (-3% to -12%) Buffer Protect index which targets a 9% buffer on the S&P 500 after the first 3% of losses on the index while also providing growth up to a cap.
Similar to SPQB, it will aim to limit risk during the case of a “major” market sell-off.
It comes after a volatile 2022 for markets, with geopolitical disruptions, high inflation and hawkish central banks dominating markets.
Despite a strong start to the year for both fixed income and equities, many feel 2023 could also experience some level of volatility.
Rob Oliver (pictured), head of business developments for Europe at Global X, said: “Amid continued market volatility and recession fears, many investors are looking to thwart anticipated drawdowns in equity markets and maintain defined levels of risk and reward.”
He added the two new strategies will aim to protect investors – who are still looking to stay invested in broad stock indices – against the downside risk amid ongoing uncertainty.
It is the firm’s latest ETF launch since it unveiled the Global X Nasdaq 100 Covered Call UCITS ETF (QYLD) in November 2022.