This is a defined outcome ETF that gives exposure to a US equity index while using options to protect against deeper losses. Over a one-year outcome period, it cushions a wider range of losses than a standard buffer, but in exchange applies a lower upside cap. The structure is reset every July.

It suits conservative investors who want to invest in US stocks, receive protection against deeper losses, and accept a lower upside cap.

It is a passively managed (index-tracking) ETF run by First Trust.

While giving exposure to a US equity index, the fund uses an options structure to cushion deeper losses than a standard buffer over the one-year outcome period, and in return places a lower cap on upside gains. A new buffer and cap are set every July, and buying partway through the outcome period can change the protection and cap that apply.

• Structure that cushions deeper losses
• Defined outcome design with a lower upside cap

Assets under management (AUM) stand at $496.4M, and the total expense ratio is an annual 0.85%.

Compared with other buffer and defined outcome ETFs such as BUFR and BUFD, the main points of comparison are the level of protection, the cap, and the outcome period.

A deep buffer strategy tends to show a pattern in which gains are more limited than the underlying index in rising markets because of the lower cap, while in falling markets it cushions a wider range and sharply reduces the drawdown. The protection and cap that actually apply depend on whether you enter partway through the outcome period.

Defined outcome products tend to attract inflows from demand for downside protection when market uncertainty rises, and money sometimes shifts toward this product group when demand for greater protection grows. It is also worth noting that performance varies with market conditions and the outcome period.

Its strength is deeper downside cushioning, while the lower upside cap, dependence on the outcome period, and changed terms for mid-period entry are points to consider.

To invest in US stocks directly without protection, direct substitutes include SPY and VOO, which track the S&P 500. For a laddered buffer that spreads across several outcome periods, products such as BUFR are also worth comparing. Buffer products with a different start month, such as GFEB, can also be considered. The three products shown in the table, BUFR, BUFD, and PJAN, differ in protection level and structure: a laddered buffer, a deep buffer, and a buffer with a different start month, respectively. This ETF's differentiator is its deeper buffer structure based on a July start.

Here are the points to review before investing in DJUL. The deeper downside cushion is appealing, but the lower upside cap, dependence on the outcome period, and the limits of the buffer need to be confirmed in advance. It is best to approach the fund only after fully understanding the defined outcome structure.

The low upside cap and large declines that exceed the buffer are the main variables for performance, and buying partway through the outcome period changes the protection and cap that apply. Without a full understanding of the defined outcome structure, you may get results that differ from your expectations.

It is a suitable candidate for conservative investors who want to invest in US stocks while being protected against deeper losses. If you want to invest without protection, products such as SPY and VOO are the option, and if you want a deeper buffer structure, it is advisable to choose this product after understanding how it works.