IDMY provides exposure to developed international markets with a 15% downside buffer over a one-year period starting each May. You get most of the upside potential of international stocks but with protection against the first 15% of losses.
How It Works
The fund uses a options overlay strategy on international developed market exposure, selling upside calls to fund protective puts that create the 15% buffer. The protection resets annually each May, with the upside cap determined by options pricing at reset. Between resets, the buffer and cap levels float with the market, meaning mid-period investors may have different effective protection levels.
Key Features
- 15% downside buffer protects against moderate corrections in international markets
- Annual May reset provides predictable protection windows for systematic investors
- International exposure offers buffer protection outside typical US-focused defined outcome products
Risks
- Losses beyond 15% hit dollar-for-dollar — a 25% drop means you lose 10%
- Upside cap (typically 10-15%) means missing out on strong rallies in international markets
- Mid-period purchases get unpredictable protection — buy in November and your buffer might already be partially consumed
Who Should Own This
Best for investors wanting international exposure but worried about near-term volatility — think someone nearing retirement who needs geographic diversification but can't stomach another 2022-style selloff. The May reset makes it ideal for annual rebalancing schedules, though the zero expense ratio seems suspiciously unsustainable.