How does a buffered ETF fit within your ETF portfolio? Is it either/or?
A buffered ETF, like ARK’s DIET ETFs, is designed to be a complement, not a replacement, for an existing ETF portfolio—especially if you already own other ARK funds like ARKK – the ARK Innovation ETF.
Think of it this way:
- Traditional ETFs like ARKK give an investor full exposure to market upside and downside. They are ideal for investors with high risk tolerance and long time horizons.
- Buffered ETFs offer a way to stay invested in the same themes—like innovation and technology—but with reduced risk and a more predictable outcome over a 12-month period.
So, it’s not a matter of either/or. Many investors might:
- Keep some money in traditional ARK ETFs to maximize long-term growth potential.
- Use buffered ETFs like ARK DIET to smooth out volatility or protect capital during uncertain market conditions.
- Shift between the two based on life stage, market views, or financial goals.
For example, if an investor is planning to use the money within a few years or if they're nervous about market swings, a buffered ETF like ARK DIET lets them stay aligned with ARK’s innovation themes—while giving more control over risk.