VistaShares

This address is how we stay in touch with the professionals who follow our work.

VistaShares delivers innovative Liquid Alternative investment solutions for today's investors. VistaShares ETFs are actively managed by industry and investment experts, offering a number of distinct strategies. Supercycle® Growth Equity ETFs seek exposure to technology-driven economic Supercycles® that the adviser believes may offer long-term growth potential. Target 15® option-income ETFs seek to generate monthly income while complementing a core equity portfolio. Income is not guaranteed and will vary, and the Target 15® name refers to the strategy's objective rather than a guaranteed or promised return. Investing involves risk, including possible loss of principal. There is no guarantee that any investment objective will be achieved, and past performance does not guarantee future results.

What a buffer gives up

The room on the downside is paid for with the upside. A buffer fund gives up any gain above its cap, it usually gives up the dividends of the companies in the index, and it carries a fee that a plain index fund does not. In a strong year all three show up at once. In a year when the index ends roughly where it started, the dividends and the fee are most of the difference.

The buffer is also narrower than it sounds. It covers a stated range of decline over the whole period, measured from the starting level. A fall larger than the buffer is borne in full below that range, and a fall that happens early and recovers late can leave the fund's price well below the index for much of the year before the terms settle at the end.

None of this makes the structure good or bad. It makes it specific, and the fit depends on whether the shape it offers is the shape a client actually needs.

It also helps to say plainly what the buffer is not. It is not a floor under the fund's price on any particular day, it does not reset when the market recovers, and it applies to the reference index rather than to anything else in a client's portfolio. Those limits are written into the terms and are easy to miss in a summary.

Whose address this is

vsharestrust.com belongs to VistaShares, and every message that comes from it is ours. What we publish is not kept here: it lives on our main website, vistashares.com.

If a message from vsharestrust.com reached you and you want to confirm it came from us, write to info@vistashares.com or call (844) 875-2288.

What this address covers

Notes from this address cover defined outcome investing, the family of ETFs built to cap gains and absorb a set amount of loss over an outcome period. The interest is in how the structures work and where they tend to be misunderstood, not in any one fund.

A buffer fund looks simple on its first day and becomes harder to read with every day that passes, because the distance to the cap and the room left in the buffer both move with the market. Most of the confusion around the category lives in that second half of the story.

What the option package does

Under the label, a buffer fund is a combination of listed options on one index, bought and sold together so that they cancel out in some places and pay out in others. One piece gives the fund exposure to the index going up. A second piece pays out as the index falls through a set range, which is where the buffer comes from. A third piece is sold to pay for the second, and selling it is what creates the cap.

So the cap is the price of the buffer. The more the market charges for insurance against a fall, the more upside has to be sold to pay for it, and the lower the cap comes out. When options are cheap the cap is higher. That relationship is the single most useful thing to understand about the category.

Because the options are listed and cleared, the structure can be described exactly on its first day. What cannot be described in advance is where the index will be at the end, which is the only thing that decides which part of the package ends up mattering.

That is also why two buffer funds on the same index can look alike on a fact sheet and behave differently in a given month. The packages are bought on different days, at different option prices, and each one only settles into its stated shape on its own final day.