Day Hagan has listed a new ETF on the NYSE Arca today — the Day Hagan Smart Buffer ETF (DHSB).
The actively managed fund offers exposure to U.S. equity markets while aiming to mitigate downside risk and provide upside potential.
Its strategy uses options to provide income and hedge against downturns, according to DHSB’s prospectus. DHSB combines positions in call and put options on U.S. equity investments. By selling covered calls, the fund generates premiums, which are reinvested into put options or spreads for downside protection. This strategy creates a buffer against market declines while limiting exposure to volatility.
See More: Why Buffer ETFs Make Sense Right Now
DHSB primarily invests in ETFs tied to U.S. equity indexes, as well as a range of different types of individual securities in those indexes. The fund has a net expense ratio of 0.68%.
A Closer Look at Buffer ETFs
Buffer ETFs like DHSB offer a unique investment proposition for those looking for a balance between growth and risk management.
While buffer ETFs can provide significant downside protection through options strategies, they also come with a trade-off: They limit the upside potential. This cap on gains ensures that even if the market performs well, the fund may not fully capture the top returns.
Day Hagan currently lists three other ETFs in the U.S. that have combined assets of more than $690 million — the Day Hagan/Ned Davis Research Smart Sector ETF (SSUS ), the Day Hagan/Ned Davis Research Smart Sector Fixed Income ETF (SSFI ), and the Day Hagan/Ned Davis Research Smart Sector International ETF (SSXU ).
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