Last Updated on 9 January 2021 by F.R.Costa

Optimism is so high that it is time to rotate from growth to value. Article originally published at Master Investor Magazine October 2020 Issue 67.

With markets already too high and the prospects for a second wave of Covid-19 rising, it is time to look at passive strategies for downside protection. A defined-outcome ETF may be just what many investors are looking for.

As we approach the cold season in the northern hemisphere, the number of cases is expected to rise even faster. When SARS and influenza mix together, we just don’t know what might happen. And, we shouldn’t rely on a vaccine, at least not for this coming winter, as none is fully developed yet and it will take time for a vaccine to reach the population in a way to provide herd immunity.

A defined outcome ETF offers protection against the downside in the form of a buffer. However, this comes at the cost of limiting the upside potential, in the form of a cap.

Innovator ETFs is a leading issuer in the defined outcome world. The company launches a defined outcome product every month with a new cap and buffer expiring in 12 months. The fund then resets, according to the new market levels at that point.

About F.R.Costa

Filipe has more than 20 years experience with financial markets. He holds a degree in Economics with a specialisation in Finance and he's currently finishing a PhD in Finance. He used to work as financial consultant and research associate but then decided to return to academia five years ago. Since that, he has been an Invited Lecturer, teaching courses on Investments, Financial Markets, and Monetary Economics. He is also a regular contributor writer at The Master Investor Magazine.

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