Buffer (defined-outcome) ETFs

Options-built funds that trade away upside for a stated downside buffer — over a specific window.

Buffer ETFs use options packages to offer a defined outcome over an outcome period (usually 12 months): they absorb the first X% of the index's loss (the buffer) in exchange for capping your upside at Y%. Both numbers are set on the period's start date.

The defined outcome only applies if you buy on day one and hold to the period's end. Buy mid-period and your effective buffer and cap differ from the headline — issuers publish 'remaining buffer/cap' figures daily for this reason.

These funds hold options, not stocks, so they pay little or no dividend income, and the cap means strong bull markets are largely given away. They are a risk-shaping tool with real, quantifiable trade-offs printed in the prospectus.