MAUG provides downside protection through a structured outcome strategy that caps losses over a one-year period starting each August, while allowing upside participation to a predetermined cap. It's designed for investors who want equity exposure but can't stomach full market drawdowns.
How It Works
The fund uses a combination of S&P 500 exposure and a ladder of put and call options to create a defined outcome profile that resets annually in August. The strategy typically limits losses to around 15% while capping gains at roughly 10-15%, with exact levels set at each annual reset. Between reset dates, the protection and cap levels float based on market movements and time decay.
Key Features
- Built-in floor protects against the first ~15% of S&P 500 losses over each outcome period
- Known upside cap and downside buffer levels locked in at each August reset date
- More conservative than typical buffer ETFs with deeper downside protection
Risks
- Losses beyond the buffer (typically 15%) are unprotected and hit dollar-for-dollar
- Buying mid-period means inheriting a floating protection level that may be less favorable
- Capped upside means missing out on strong rallies — painful in bull markets
Who Should Own This
Best for pre-retirees or conservative investors who need equity exposure but would panic-sell in a 20%+ drawdown. Works well as a core holding for those willing to trade unlimited upside for sleeping better at night. Investors should ideally buy at August reset and hold the full year to maximize the strategy's benefits.