HJUN provides one-year downside protection against the first 15-20% of S&P 500 losses starting each June, in exchange for capping your upside at around 10-15%. Think of it as disaster insurance that you pay for by giving up your home runs.
How It Works
The fund buys a specific options package that resets annually in June: long at-the-money calls for market exposure, long out-of-the-money puts for downside protection, and short out-of-the-money calls to fund the protection by capping gains. The buffer and cap levels are set at inception based on options pricing and don't change until the next reset.
Key Features
- Complete protection against 15-20% drawdowns if held for the full outcome period
- Known upside cap and downside buffer locked in at purchase, unlike traditional hedging
- June reset means you can plan around tax years and mid-year portfolio reviews
Risks
- Losses beyond the buffer hit you dollar-for-dollar — a 30% crash still costs you 10-15%
- Buy mid-period and you inherit a partially depleted buffer with lower remaining protection
- Early sale breaks the outcome promise — you're just trading options at market prices
Who Should Own This
Perfect for nervous equity investors who'd rather sleep well than maximize returns — think pre-retirees who can't stomach another 2008 but need equity exposure. Also works for advisors who want to keep clients invested through volatility without constant hand-holding. Not for anyone chasing maximum returns or trading actively.