MAXJ
iShares Large Cap Max Buffer Jun ETF
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Are you okay wirh a 40% drop in value at year 4? You could consider doing a ladder of buffered S&P500 ETFs: MMAX, MAXJ, SMAX, DMAX and PAAA or BOXX (20% of each). Some market upside potential with drawdown protection. It all depends on your risk tolerance. I'm very comfortable with this very limited risk profile for a short-term investment, others may not be.
What are your thoughts on this for an education account that is currently drawing down? My daughter is just finishing Freshman year. I need 30k a year to cover her school. There's 120k left in her Coverdell. 30k is in a MM ETF for next year. 90k is in various ETFs (down from it's February high but still up nicely from 12 months ago). I was thinking MAXJ would be a decent option to guarantee I have the final 2 years of undergrad covered but still allowing for some upside so that maybe I can cover all of grad school too. If I put the 90k into a MM, it'll go up to 104k in 3 years (rate changes not withstanding). With MAXJ, it would be between 90 and $120k. I was also thinking about JEPI as an option.
Not the OP, but a "buffer ETF" may be of interest, for instance: [MAXJ](https://www.ishares.com/us/products/337965/ishares-large-cap-max-buffer-jun-etf) Not an advice, as fund is relatively new - since last year. So not much historical performance to track.
MAXJ buffer ETF won't go below 25/share NAV unless options contracts aren't valid
>Are these funds typically passive in their trading strategy during the hedge period? "These funds" are brand new, though similar structured notes have existed fora long time. Blackrock put an "active" label on it, but it looks like a passive fund. I would expect them not to change the parameters of the portfolio in between hedge periods. >Is there a fund that could be more proactive than MAXJ? i.e. sell when the S&P has risen to fill the cap at sometime before the hedge period ends? The thing is that if SPX hits or exceeds the max before expiration, the collar will not yet be worth its max. Play with https://optionstrat.com/build/collar/SPY/SPYx100,.SPY250815P557,-.SPY250815C600 to see how its value changes with the underlying price and over time. A fund *could* be more proactive. There is a tension between running an easily inteligible strategy which retail investors would like and one that has discretionary management, which takes away from that clear sales pitch. You can easily implement it yourself with listed options. A collar is (a) long stock, (b) buying a put to cap the downside, and (c) selling a call which caps the upside and helps pay for the put. And then if you want to adjust your exposure, you can do so at any time.
Context: I've been considering MAXJ ETF\[1\] to put some money that can take some risk over the next 5-10 years but, I want to avoid downside. I am fine with this being capped at around \~10-11% upside that MAXJ Offers. So basically insurance against downside. Questions for you: 1. Are these funds typically passive in their trading strategy during the hedge period? It seems to say so in the prospectus\[2\] In other words they never \*sell\* (or exercise, though you forgo the premium) these Europoean Flex options if the underlying(S&P) increases and options are in the money during the hedge period, instead only holding them uptil the end? 2. Is there a fund that could be more proactive than MAXJ? i.e. sell when the S&P has risen to fill the cap at sometime before the hedge period ends? I realize it would have a higher management cost, but are such funds available? \[1\] [https://www.ishares.com/us/products/337965/ishares-large-cap-max-buffer-jun-etf](https://www.ishares.com/us/products/337965/ishares-large-cap-max-buffer-jun-etf) \[2\] [https://www.ishares.com/us/library/stream-document?stream=reg&product=IUS-MAXJ&shareClass=NA&documentId=2263201%7E2263077%7E2263078&iframeUrlOverride=%2Fus%2Fliterature%2Fprospectus%2Fp-ishares-max-buffer-etfs-7-31.pdf](https://www.ishares.com/us/library/stream-document?stream=reg&product=IUS-MAXJ&shareClass=NA&documentId=2263201%7E2263077%7E2263078&iframeUrlOverride=%2Fus%2Fliterature%2Fprospectus%2Fp-ishares-max-buffer-etfs-7-31.pdf)
MAXJ offers full downside protection, making it appealing for cautious investors.
Last 10 years SP500 annual returns were: ‘23 - 26.29 ‘22 - (18.11) ‘21 - 28.71 ‘20 - 18.4 ‘19 - 31.49 ‘18 - (4.38) ‘17 - 21.83 ‘16 - 11.96 ‘15 - 1.38 ‘14 - 13.69 ‘13 - 32.39 If you strip out all the negative years and cap the earnings @ 10.6% your total return over ten years with MAXJ = 57.98% SPY over that same period was 298% Approaching or in retirement and can’t handle any drawdowns and then maybe MAXJ makes sense? Maybe?