FT Vest Emerging Markets Buffer ETF - March (TMAR) seeks to provide exposure to emerging markets equities while offering downside protection through a defined outcome strategy. The ETF uses options overlays to buffer against the first 10-15% of losses over a one-year period ending each March, while capping upside gains at a predetermined level.
How It Works
TMAR employs a sophisticated options-based strategy that combines emerging markets equity exposure with protective put spreads and covered call options. The fund typically holds a diversified portfolio of emerging markets stocks or ETFs while simultaneously purchasing and selling options contracts to create the buffer and cap structure. This defined outcome approach resets annually each March, establishing new protection and upside parameters. The strategy requires active management to maintain the options overlay and adjust positions as market conditions change throughout the outcome period.
Key Features
- Provides 10-15% downside buffer protection over one-year periods, limiting losses during emerging markets volatility while maintaining upside participation
- Annual March reset allows investors to reassess buffer levels and upside caps based on current market conditions and volatility expectations
- Combines emerging markets growth potential with defined risk parameters, offering more predictable outcomes than traditional emerging markets investing
Risks
- This ETF can lose value beyond the buffer level if emerging markets decline more than 10-15% during the outcome period, with losses accelerating below that threshold
- Upside gains are capped at predetermined levels, potentially missing significant emerging markets rallies that exceed the cap during strong performance periods
- Options strategies may not perform as expected due to volatility changes, early exercise, or market disruptions affecting the buffer and cap mechanics
Who Should Own This
Best suited for moderate-risk investors with 1-3 year time horizons seeking emerging markets exposure with defined downside protection. Appropriate as a satellite holding representing 5-15% of an international allocation. Ideal for investors who want emerging markets growth potential but cannot tolerate the typical 40-50% drawdowns of traditional emerging markets funds.