On Monday, First Trust revealed their new large cap target outcome ETF, the FT Vest U.S. Equity Equal Weight Buffer ETF – September (RSSE ).
The fund has a net expense ratio of 0.85%. RSSE seeks to give investors returns that match, before fees and expenses, the price return of the RSP Invesco S&P 500® Equal Weight ETF (RSP ).
RSP provides equal weight exposure to stocks within the S&P 500. By using this approach, the fund can avoid overconcentration risks while providing good engagement with smaller companies within the index.
To fulfill RSSE’s investment objectives, the fund invests in FLEX Options that reference RSP’s price performance. By using FLEX Options, the fund intends to implement a target outcome.
Defensive Upside Participation
These outcomes include a defensive buffer against the first 10% of losses that RSP may face. However, this comes at the expense of an upside cap on potential returns.
Across the Target Outcome Periods, RSP will invest in a mix of bought and written call and put options. The prospectus adds that the fund will generally hold four different kinds of FLEX Options during the Outcome Period. Two of these options are call and put options that are bought by the fund. Simultaneously, the other two options in play are call and put options written by the fund.
The first Target Outcome Period of RSSE began upon the fund’s launch, and is slated to end on September 19th, 2025. After the first Target Outcome Period ends, the next one will begin. Subsequent Target Outcome Periods are expected to conclude after one year.
With extensive experience in navigating the landscape of ETFs, First Trust has over 160 funds listed in the United States. As a whole, these funds represent over $148 billion in assets under management.
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