Should You Be Investing In Buffered ETFs?

These new ETFs help cut stock market losses, but you’ll sacrifice some gains.

Person looking at phone investing on computer.
(Image credit: Getty)

If it’s true that the psychological pain of losing money is twice as great as the pleasure you feel when you make a profit, then there’s an exchange-traded fund for that. A new class of ETFs, called defined-outcome or buffered ETFs, limit your losses in the stock market in exchange for giving up some of your potential gains. 

And they’re growing in popularity. The first defined-outcome ETF launched in 2018. Today, there are nearly 270 funds, with $47 billion in aggregate assets. 

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Nellie S. Huang
Senior Associate Editor, Kiplinger's Personal Finance

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.