New ETFs offer one-stop solution for 12% and 20% Buffer ETF
exposure
Following the launch of the PGIM U.S. Large-Cap Buffer 12 and 20
ETF series, PGIM,1 the $1.34 trillion global investment management
business of Prudential Financial, Inc. (NYSE: PRU), has launched
two laddered funds of buffer ETFs, the PGIM Laddered Fund of
Buffer 12 ETF (BUFP) and the PGIM Laddered Fund of Buffer 20
ETF (PBFR) (the “ETFs”), on the Cboe BZX. The ETFs will be
offered at a 0.50% net expense ratio, making them the lowest-cost
fund of buffer ETFs in the marketplace.2
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Stuart Parker, President and CEO, PGIM
Investments (Photo: Business Wire)
The two new ETFs seek to generate capital appreciation by
providing investors with U.S. large-cap equity market exposure
through a laddered portfolio of its Underlying Buffer ETFs. The
Underlying Buffer ETFs seek to provide investors with limited
protection against a decline in the U.S. large-cap equity market,
with an upside cap on capital appreciation in that market, over a
specified time period.
BUFP targets an equal-weight investment in each of the 12
PGIM U.S. Large-Cap Buffer 12 ETFs, while PBFR targets an
equal-weight investment in each of the 12 PGIM U.S. Large-Cap
Buffer 20 ETFs, with a remit to rebalance back to an equal weight
on a quarterly basis.
“Laddered buffer ETFs are one of the fastest-growing segments of
an already accelerating defined outcome ETF market — but
flexibility and accessibility is critical in this space. We’ve seen
strong client demand for both the underlying buffer ETFs as well as
single-ticker solutions that can provide efficient exposure to this
style of investing while reducing some of the operational load of
investing in the individual monthly vintages,” said Stuart Parker,
president and CEO of PGIM Investments.
With the launch of BUFP and PBFR, in addition to the accelerated
rollout of the 12% and 20% Buffer ETFs, PGIM now offers a robust
suite of outcome-oriented solutions for investors to help navigate
market volatility. The ETFs are subadvised by PGIM Quantitative
Solutions (PGIM Quant), the quantitative equity, multi-asset and
liquid alternatives specialist of PGIM.
“We are excited to be working alongside PGIM Investments to
bring these new products to market and offer investors the ability
to choose between individual monthly 12% and 20% buffer ETFs, or a
one-ticker solution,” said Linda Gibson, CEO of PGIM Quantitative
Solutions.
Unlike the Underlying Buffer ETFs, the ETFs do not pursue a
target outcome strategy. The buffer is only provided by the
Underlying Buffer ETFs, and the ETFs themselves do not provide any
stated buffer against losses. The ETFs likely will not receive the
full benefit of the Underlying Buffer ETF buffers and could have
limited upside potential. The ETFs’ returns are limited by the caps
of the Underlying Buffer ETFs.
Learn more about PGIM’s suite of 40 ETFs which spans fixed
income, equity, and multi-asset class solutions.
ABOUT PGIM INVESTMENTS
PGIM Investments LLC and its affiliates offer more than 100
funds globally across a broad spectrum of asset classes and
investment styles. All products draw on PGIM’s globally diversified
investment platform that encompasses the expertise of managers
across fixed income, equities, alternatives and real estate.
ABOUT PGIM QUANTITATIVE SOLUTIONS
PGIM Quantitative Solutions is the quantitative equity,
multi-asset and liquid alternatives specialist of PGIM. For more
than 45 years, PGIM Quantitative Solutions has helped investors
around the world solve their unique needs by leveraging the power
of technology and data as well as advanced academic research. As of
March 31, 2024, PGIM Quantitative Solutions managed $102 billion in
client assets.3 For more information, please visit
pgimquantitativesolutions.com.
ABOUT PGIM
PGIM is the global asset management business of Prudential
Financial, Inc. (PFI). PFI has a history that dates back over 145
years and through more than 30 market cycles. With 41 offices in 19
different countries (as of March 31, 2024), our more than 1,450
investment professionals are located in key financial centers
around the world.
Our firm comprises multi-managers that collaborate with each
other and specialize in a particular asset class with a focused
investment approach. This gives our clients diversified solutions
with global depth and scale across public and private asset
classes, including fixed income, equities, real estate, private
credit, and other alternatives. As a leading global asset manager
with $1.34 trillion in assets under management (as of March 31,
2024), PGIM is built on a foundation of strength, stability and
disciplined risk management.
For more information, visit pgim.com.
Prudential Financial, Inc. (PFI) of the United States is not
affiliated in any manner with Prudential plc, incorporated in the
United Kingdom, or with Prudential Assurance Company, a subsidiary
of M&G plc, incorporated in the United Kingdom. For more
information please visit news.prudential.com.
1 The term PGIM as used in this announcement includes PGIM
Investments LLC, an indirect, wholly owned subsidiary of Prudential
Financial, Inc.
2 Source: Morningstar Direct as of May 31, 2024.
3 AUM totals shown include assets of PGIM Wadhwani LLP, which is
a separate legal entity.
PGIM Laddered Fund Risks
The Funds are “funds of funds” and are subject to Underlying
ETF and SPY risks, in that the value of an investment in the
Funds will be related to the investment performance of the
Underlying ETFs and, in turn, SPY. Therefore, the principal risks
of investing in the Funds are closely related to the principal
risks associated with the Underlying ETFs and its investments.
Exposure to the Underlying ETFs will also expose the Funds to a pro
rata portion of the Underlying ETFs’ fees and expenses. The
fluctuating value of the FLEX Options will affect the Underlying
ETFs’ value and, in turn, the Funds’ value. The Funds intend to
generally rebalance its portfolio to equal weight (i.e., 8 1⁄3% per
Underlying ETF) quarterly, in connection with the reset of the cap
of each Underlying ETF. In between such rebalances, market
movements in the prices of the Underlying ETFs may result in the
Funds having temporary, larger exposures to certain Underlying ETFs
compared to others. Exposure to the Underlying ETFs will also
expose the Funds to a pro rata portion of the Underlying ETFs’ fees
and expenses.
The Underlying ETFs invest in FLEX Options and, to the
extent that the Underlying ETF writes or sells an option, if the
decline or increase in the underlying asset is significantly below
or above the exercise price of the written option, the Underlying
ETF and, in turn, the Funds could experience a substantial or
unlimited loss. FLEX Options are also subject to the risk that they
may be less liquid than other securities, including standardized
options as well as trading risks, as they are required to be
centrally cleared, and valuation risks.
The Funds’ risks include, but are not limited to, target
outcome period risk, where in the event the Funds acquire
shares of an Underlying ETF after the first day of a Target Outcome
Period or disposes of shares prior to the expiration of the Target
Outcome Period, the value of the Funds’ investment in Underlying
ETF shares may not be buffered against a decline in the value of
SPY and may not participate in a gain in the value of SPY for the
Funds’ investment period; buffered loss risk, in which there
can be no guarantee that the Underlying ETFs will be successful in
its strategy to provide downside protection against losses; cap
change risk in which a new cap for an Underlying ETF is
established at the beginning of each Target Outcome Period and is
dependent on prevailing market conditions and is unlikely to remain
the same for consecutive Target Outcome Periods; and capped
upside risk, in that, since the Funds will acquire shares of
the Underlying ETFs in connection with creations of new shares of
the Funds and during each quarterly rebalance, the Funds typically
will not acquire Underlying ETF shares on the first day of a Target
Outcome Period. In the event that the Funds acquire Underlying ETF
shares after the first day of a Target Outcome Period and the
Underlying ETF has risen in value to a level near or at the cap,
there may be little or no ability for the Funds to experience an
investment gain on those Underlying ETF shares; however, the Funds
will remain vulnerable to downside risks.
As actively managed ETFs, the Funds are subject to risks
involved with: ETF shares trading risk (including the risk
of the shares trading at a premium or discount to net asset value
or the lack of an active trading market); authorized participant
concentration risk; and the risk of transacting in cash
versus in-kind. The Funds are subject to market risks,
including economic risks, as well as market disruption and
geopolitical risks (the value of investments may decrease, and
international conflicts and geopolitical developments may adversely
affect the U.S. and foreign financial markets, including increased
volatility); and portfolio turnover risk, in that the Funds’
turnover rate may be higher than that of other ETFs which may
involve expenses and lead to the realization of capital gains.
As a new and relatively small fund, the Funds’
performance may not represent how the Funds are expected to or may
perform in the long term. Large shareholders could subject the
Funds to large-scale redemption risk. Your actual cost of
investing in the Funds may be higher than the expenses shown in the
expense table for a variety of reasons. There is no guarantee the
Funds’ objectives will be achieved. The risks associated with the
Funds are more fully explained in the Funds’ prospectus and summary
prospectus.
Consider a fund’s investment objectives, risks, charges and
expenses carefully before investing. The prospectus and summary
prospectus contain this and other information about the fund.
Contact your financial professional for a prospectus and summary
prospectus. Read them carefully before investing.
Investing in exchange traded funds (ETFs) involves risks. Some
ETFs have more risk than others. The investment return and
principal value will fluctuate, and shares when sold may be worth
more or less than the original cost, and it is possible to lose
money.
The Funds are actively managed ETFs and thus do not seek to
replicate the performance of a specified index. ETF shares are not
individually redeemable from the Funds. Shares may only be redeemed
directly from the Fund by Authorized Participants in Creation
Units.
Investment products are distributed by Prudential Investment
Management Services LLC, member FINRA and SIPC. PGIM Quantitative
Solutions is a wholly owned subsidiary of PGIM. © 2024 Prudential
Financial, Inc. and its related entities. PGIM, PGIM Quantitative
Solutions, and the PGIM logo are service marks of Prudential
Financial, Inc. and its related entities, registered in many
jurisdictions worldwide.
Investment products are not insured by the FDIC or any
federal government agency, may lose value, and are not a deposit of
or guaranteed by any bank or any bank affiliate.
1080778-00001-00
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MEDIA Kylie Scott +1 973 902 2503
kylie.scott@pgim.com
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