CJUN provides a 15% downside buffer against S&P 500 losses over a one-year period starting each June, while capping upside gains at a predetermined level. Think of it as equity exposure with training wheels — you give up some upside to avoid the first 15% of any market decline.
How It Works
The fund uses a options collar strategy, buying S&P 500 exposure while simultaneously purchasing put options 15% below the starting price and selling call options to fund the protection. Each June, the fund resets with new options positions, establishing fresh buffer and cap levels based on prevailing market conditions. Between reset dates, the buffer and remaining cap levels fluctuate with market movements.
Key Features
- 15% downside buffer protects against moderate corrections but won't help in severe bear markets
- Annual June reset means protection level and upside cap are only precise at the start of each period
- Zero expense ratio makes this cheaper than most structured products or annuities offering similar protection
Risks
- Losses beyond 15% hit dollar-for-dollar — a 25% market drop still means a 10% loss for you
- Upside cap could leave significant gains on the table in strong bull markets, potentially 10-20% foregone returns
- Mid-period investors face asymmetric risk — less buffer remaining but full exposure to capped upside
Who Should Own This
Best suited for nervous equity investors within 5-10 years of retirement who want stock exposure but can't stomach another 2008-style drawdown. Also works for advisors managing behavioral risk — clients who might panic-sell in a 20% decline could stay invested with this buffer. Not appropriate for long-term investors who can ride out volatility.