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It’s a stressful investing landscape right now and investors are feeling it. Volatility, driven by a chaotic geopolitical landscape, has defined much of the market narrative this year—perhaps just second to everything AI. Although markets have marched steadily upward, a growing number of investors are making more defensive moves to adapt. Recent data from VettaFi suggests downside protection ETFs are gaining significant traction.
According to survey data from a recent VettaFi webinar, more investors indicated they prefer downside protection and covered call ETFs to their upside-chasing peers. In the survey, 15% of respondents expressed interest in inverse ETFs and 9% in leveraged ETFs. By contrast, 55% expressed interest in covered call ETFs and 66% indicated interest in downside protection ETFs.
The ETF landscape has seen significant product innovation in recent years, with increasing options for investors. While new offerings range from aggressive offensive strategies to defensive plays, downside protection ETFs are currently capturing more interest.
More firms are also entering the space. Goldman Sachs—already known for income ETFs such as the Goldman Sachs S&P 500 Premium Income ETF (GPIQ)—has recently acquired Innovator ETFs. The Innovator suite’s two most recent additions, the dual-directional and floor ETFs, are positioned as part of the defensive fund strategy set.
The floor ETFs are designed to limit downside by protecting investors against losses greater than 10%. The dual-directional ETFs are described as complementing that approach by delivering inverse performance and acting as a stabilizer for portfolios facing market volatility.
With market uncertainty and investor anxiety continuing, and with product innovation expanding to meet ETF demand, Goldman Sachs is adding to its strategy pool. The acquisition includes options such as GPIQ for investors looking to add income and/or downside protection to their portfolios.
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