A No-Downside ETF? Really?

A No-Downside ETF? Really?

An ETF with 100% downside protection seems too good to be true. But Calamos Investments has one – and is working on 11 more. 

The Calamos S&P 500 Structured Alt Protection ETF (NYSE: $CPSM) launched in May, giving investors roughly 9.3% upside potential (i.e., an upside capped at 9.3% including fees) for its first year and literally no downside – at least for investors who buy at the inception. (Those buying later, after prices move, will still have an upside cap and a downside cap, but the proportions will vary, and Calamos lists the current levels on their website; at press time their S&P 500 ETF has 98.27% downside protection, for instance.)

I talked with Calamos’ Head of ETFs Mark Kaufman about their latest S&P 500 no-downside ETF, and forthcoming suite of others (NASDAQ 100 is next). We talked about:

  • How Calamos uses options to structure these ETFs without actually buying any stocks
  • How the 100% downside protection works (hint: no credit risk)
  • Where the idea came from
  • What differentiates Calamos’ products from a competitor’s no-downside ETFs
  • What happens after the one-year term is up
  • What type of investors no-downside ETFs are for
  • And plenty more

Click here or on the image below to watch.

This article is for informational purposes only and is neither investment advice nor a solicitation to buy or sell securities. All investment involves inherent risks, including the total loss of principal, and past performance is not a guarantee of future results. Always conduct thorough research or consult with a financial expert before making any investment decisions. Neither the author nor BBAE has a position in any investment mentioned.

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