BlackRock launches stock ETF MAXJ with 100% downside hedge . Good investment?
(Reuters) -BlackRock has launched a 'buffer' exchange-traded fund that seeks to offer a 100% downside hedge to risk-shy investors looking to tap the equity markets, the world's largest asset manager said on Monday.
So-called buffer or risk-managed ETFs help maximize returns from an asset for investors and simultaneously provide downside protection over a specific period.
The novel product will likely appeal to investors who are hoping to ride a rally in the stock markets as they continue to trade near record highs, but are concerned that a slowing economy and higher-for-longer interest rates can together hurt sentiment going forward.
Buffer ETFs also typically see lower redemption requests during times of heavy market volatility.
"BlackRock is not early – and actually is a little late – to the buffered ETF game, but with (the company's) size, reach, and marketing machine, it has a fair chance of catching up with and surpassing earlier market entrants," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
"Launching buffered ETFs now, when the market is near all-time highs and many investors are nervous – especially with inflation, upcoming elections, and expanding debt – could be especially fortuitous for them," he added.
The iShares Large Cap Max Buffer Jun ETF started trading on Monday under the ticker symbol 'MAXJ'.
https://finance.yahoo.com/news/blackrock-launches-stock-etf-100-144057919.html