MART delivers S&P 500 exposure with a 10% downside buffer and capped upside over a one-year period starting each March. It's designed for investors who want equity participation but can't stomach a full market drawdown.
How It Works
The fund uses a options collar strategy - buying S&P 500 exposure while simultaneously purchasing put spreads for downside protection and selling call options to fund the buffer. The buffer protects against the first 10% of losses from the March starting point, but losses beyond that hit dollar-for-dollar. Upside is capped at a level set each March based on prevailing option prices.
Key Features
- 10% downside buffer resets annually each March, protecting against moderate corrections
- Upside cap varies by market conditions - typically 12-18% in normal volatility environments
- No expense ratio charged, making it cheaper than most structured products
Risks
- Losses beyond 10% are unprotected - a 25% market drop means you lose 15%
- Missing rallies hurts - if markets surge 30%, you might only capture 15%
- Mid-period buyers face asymmetric outcomes - less buffer remaining but full cap exposure
Who Should Own This
Best for pre-retirees or conservative investors who need equity exposure but would panic-sell in a 15% drawdown. Works as a core holding replacement for someone who otherwise might sit in cash or bonds out of fear. Not for long-term accumulators who can ride out volatility.