Horizon Nasdaq-100 Defined Risk ETF (QGRD) seeks to provide exposure to the Nasdaq-100 Index, which tracks the 100 largest non-financial companies listed on the Nasdaq exchange, while using options strategies to limit downside risk over a specific outcome period.
How It Works
QGRD employs a defined outcome strategy using options overlays on Nasdaq-100 exposure to create a buffer against losses while capping upside gains over a predetermined period, typically one year. The fund uses FLEX options to provide downside protection up to a specific threshold while limiting gains above a cap level. This structured approach resets annually, establishing new buffer and cap levels based on market conditions at reset.
Key Features
- Provides downside buffer protection against first 10-15% of losses in Nasdaq-100 over outcome period
- Caps upside participation at predetermined level, typically 8-12% annually depending on market volatility
- Annual reset mechanism allows investors to lock in new buffer and cap levels each outcome period
Risks
- This ETF can lose value beyond the buffer threshold if Nasdaq-100 declines more than the protected amount during the outcome period
- Upside gains are permanently capped, meaning investors miss returns above the predetermined ceiling even in strong bull markets
- Options strategies create complexity risk where tracking errors and early exit penalties can reduce expected protection and returns
Who Should Own This
Best suited for conservative investors with 1-year holding periods seeking Nasdaq-100 exposure with downside protection. Medium-low risk tolerance required, accepting capped upside for buffer protection. Works as satellite holding (5-15% allocation) for investors wanting technology exposure with defined risk parameters in volatile markets.