How to invest in buffer ETFs

How to invest in buffer ETFs?

Buffer ETFs (also known as "Defined Outcome ETFs") offer investors the opportunity to participate in stock market performance while incorporating a precisely defined safety net against price losses. The mechanism is based on a combination of different options: The ETF buys protection (puts) to cushion losses up to a certain percentage (the "buffer"). To finance this protection, the ETF simultaneously sells call options (calls). This creates a clearly defined performance corridor for the return within a fixed period (usually one year). Investors give up a portion of potential upside gains in exchange for being shielded from moderate market declines.

Performance Compared to the Benchmark

A buffer ETF performs very differently from its underlying index depending on the market phase:

• Outperformance (moderate bear market): If the index falls within the defined buffer (e.g., up to -10%), the ETF’s value remains nearly stable. In this phase, the ETF significantly outperforms the benchmark because it does not participate in the losses.
• Protection in market crashes: If the market drops further than the built-in buffer (e.g., a 30% drop with a 10% buffer), the ETF will also lose value. However, the loss is reduced by exactly the buffer percentage compared to the index (in this example, a loss of only -20%).
• Underperformance (strong bull market): During phases of sharply rising prices, the ETF lags behind the benchmark. Since capital gains are "capped" by the sold options, you no longer participate in a rally once the fixed upper limit is reached.

With a buffer ETF, you protect your portfolio against moderate corrections and mitigate the impact of market crashes. You purchase this downside security by capping your maximum profit potential in return. While the market for buffer ETFs is still young in Europe compared to the US, it is rapidly gaining importance as an alternative to defensive balanced funds or bonds. In this ETF guide, you will find all currently available buffer ETFs.

When choosing a buffer ETF one should consider several other factors in addition to the methodology of the underlying index and performance of an ETF. For better comparison, you will find a list of all buffer ETFs with details on size, cost, age, income, domicile and replication method ranked by fund size.

Compare all buffer ETFs in detail
Compare all buffer ETFs in a chart

Source: justETF.com; As of 23.05.26

Return comparison of all buffer ETFs

The table shows the returns of all buffer ETFs in comparison. All return figures are including dividends as of month end. Besides the return the reference date on which you conduct the comparison is important. In order to find the best ETFs, you can also perform a chart comparison.

• Cumulative
• Calendar year

Source: justETF.com; As of 30.04.26; Calculations in EUR including dividends