Samsung Asset Management announced on the 24th that it will launch a new series of 'buffer exchange-traded funds (ETFs)' that can reduce losses in a highly volatile market.
Samsung Asset Management noted that it will list 'KODEX American S&P 500 Buffer June Active' on this day. This is the second buffer ETF, following the first buffer ETF 'KODEX American S&P 500 Buffer March Active.'
Buffer ETFs are products that use derivatives techniques to cushion losses up to 10% during a downturn while simultaneously pursuing a certain level of revenue in an upturn.
This product invests in the American S&P 500 index while building a one-year option position and designing a buffer structure at the 10% level (loss cushion). To offset the expenses incurred in constructing the buffer structure, call option sales are performed, thereby setting a maximum upside cap (revenue ceiling).
Samsung Asset Management stated that the lower bound of this product's buffer is set at -10.1%, while the cap level is determined to be 17.6% (based on U.S. dollars).
This buffer ETF implements the promised loss cushion and revenue cap ratio after a one-year period (outcome period). Although the ETF can be traded before the expiration of the outcome period, it is important to note that the cushioning and cap ratios may change.
Kim Sun-hwa, team leader of the ETF Management Team 2 at Samsung Asset Management, said, 'The buffer ETF can be combined with the S&P 500 ETF or other products such as bond ETFs and equity-linked securities (ELS) to form various investment strategies.' She added, 'In the case of this product, it can be traded at the most reliable price using the market price and settlement price of the held assets, and it has all the advantages of an ETF that is freely traded and highly liquid.'