This is a defined outcome ETF that gives exposure to a U.S. equity index while using options to protect against a set range of losses. Over a one-year outcome period, it cushions a certain amount of decline in exchange for a cap on upside returns, and the structure is reset every March.

It suits moderate-risk investors who want U.S. equity exposure with protection against a set range of losses and who accept an upside cap.

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

The fund gives exposure to a U.S. equity index and uses an options structure to cushion a set range of losses over the one-year outcome period, in return for a cap on upside gains. A new buffer and cap are set every March, and buying partway through the outcome period can change the protection and cap that apply to you.

• Structure that cushions a set range of losses
• Defined outcome design with an upside cap

Assets under management (AUM) are $425.3M, and the total expense ratio is 0.85% per year.

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 level, and the outcome period.

Buffer strategies tend to return less than the underlying index in rising markets because of the cap, while in falling markets they cushion a certain range and reduce 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 investors seeking downside protection when market uncertainty rises, and money sometimes moves into this group of products when interest in volatility management increases. It is also worth noting that performance varies with the market environment and the outcome period.

The defined downside cushion is the main strength, while the upside cap, dependence on the outcome period, and changed terms for mid-period entry are points to consider.

For investors who want straight exposure to U.S. equities without protection, direct alternatives 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. What sets this ETF apart is its March-based defined outcome buffer structure.

Here are the points to check before investing in GMAR. The downside cushion is attractive, but the upside cap, dependence on the outcome period, and the limits of the cushion should be confirmed in advance. It is best to approach the fund only after fully understanding the defined outcome structure.

The cap in strong bull markets 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 thorough understanding of the defined outcome structure, you may get results that differ from your expectations.

It is a suitable candidate for moderate-risk investors who want U.S. equity exposure with protection against a set range of losses. If you want to invest without protection, consider products such as SPY and VOO. If you want a defined outcome buffer structure, it is advisable to choose this product after understanding how the structure works.