Based on the price return of the SPDR S&P 500 ETF Trust (SPY), this fund uses FLEX Options to deliver a loss buffer and a return cap at the same time. It is managed to reduce downside volatility while still participating in equity market gains.

It suits conservative growth investors who want exposure to the growth of the US large-cap market but want to reduce the risk of principal loss in a falling market.

Launched by First Trust in 2019, it is an actively managed ETF.

The one-year cycle from April to the following April is set as the "target outcome period." During that period, the portfolio is built to protect against losses if the underlying index falls within a predetermined range. In exchange, gains in a rising market are subject to a cap that is lower than the overall market's performance.

• A buffer structure that protects against part of the losses in a falling market
• A refined risk management strategy aligned with the fund's annual cycle

Assets under management (AUM) stand at $1.4B, and the expense ratio is 0.85% per year.

The fees are higher than those of a typical index fund, but they reflect the cost of the options and a premium for the downside protection design.

During periods of rising market volatility, the fund has shown steadier price movements than a standard index ETF, demonstrating stability. In rising markets, it tends to reach its predetermined return cap.

Investors anxious about falling markets have been choosing it as an alternative product, resulting in steady fund inflows, and hedging demand tied to interest rates and the economic outlook remains consistent.

It is an efficient tool for protecting against losses in a falling market, but investors should note that returns can be limited when the market surges.

BUFR and PJAN shown in the table are similar buffer ETFs that use a quarterly laddering strategy and a different monthly cycle, respectively. Depending on the start of the cycle, you can choose other monthly series such as FMAY, FJUN and FJUL to adjust your entry timing. If you want deeper downside protection, BUFD, which uses a "Deep Buffer" strategy, can also be an alternative.

Unlike a typical equity product, FAPR has a structure in which both gains and losses are limited, so use the checklist below before investing to confirm that it fits your strategy.

If you enter in the middle of the cycle, the buffer and cap you can actually receive may differ from the initial settings. Also note that the fund is directly tied to the performance of its underlying asset, SPY.

It is a suitable alternative asset for investors who want exposure to US large caps in a volatile market while lowering downside risk. It works well as a way to strengthen the stability of a portfolio.