Following the launch of the PGIM U.S. Large-Cap Buffer 12 and 20 ETF series, PGIM, the $1.34 trillion global investment management business of Prudential Financial, Inc. (NYSE: PRU), has launched two laddered funds of buffer ETFs, the PGIM Laddered Fund of Buffer 12 ETF (BUFP) and the PGIM Laddered Fund of Buffer 20 ETF (PBFR) (the “ETFs”), on the Cboe BZX. The ETFs will be offered at a 0.50% net expense ratio, making them the lowest-cost fund of buffer ETFs in the marketplace.
The two new ETFs seek to generate capital appreciation by providing investors with U.S. large-cap equity market exposure through a laddered portfolio of its Underlying Buffer ETFs. The Underlying Buffer ETFs seek to provide investors with limited protection against a decline in the U.S. large-cap equity market, with an upside cap on capital appreciation in that market, over a specified time period.
BUFP targets an equal-weight investment in each of the 12 PGIM U.S. Large-Cap Buffer 12 ETFs, while PBFR targets an equal-weight investment in each of the 12 PGIM U.S. Large-Cap Buffer 20 ETFs, with a remit to rebalance back to an equal weight on a quarterly basis.
“Laddered buffer ETFs are one of the fastest-growing segments of an already accelerating defined outcome ETF market — but flexibility and accessibility is critical in this space. We’ve seen strong client demand for both the underlying buffer ETFs as well as single-ticker solutions that can provide efficient exposure to this style of investing while reducing some of the operational load of investing in the individual monthly vintages,” said Stuart Parker, president and CEO of PGIM Investments.
With the launch of BUFP and PBFR, in addition to the accelerated rollout of the 12% and 20% Buffer ETFs, PGIM now offers a robust suite of outcome-oriented solutions for investors to help navigate market volatility. The ETFs are subadvised by PGIM Quantitative Solutions (PGIM Quant), the quantitative equity, multi-asset and liquid alternatives specialist of PGIM.
“We are excited to be working alongside PGIM Investments to bring these new products to market and offer investors the ability to choose between individual monthly 12% and 20% buffer ETFs, or a one-ticker solution,” said Linda Gibson, CEO of PGIM Quantitative Solutions.
Unlike the Underlying Buffer ETFs, the ETFs do not pursue a target outcome strategy. The buffer is only provided by the Underlying Buffer ETFs, and the ETFs themselves do not provide any stated buffer against losses. The ETFs likely will not receive the full benefit of the Underlying Buffer ETF buffers and could have limited upside potential. The ETFs’ returns are limited by the caps of the Underlying Buffer ETFs.
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