First Trust Launches ETF Providing Income and Buffer Against SPY Losses

First Trust Advisors has introduced the FT Cboe Vest U.S. Equity Buffer & Premium Income ETF (XISE). This actively managed ETF aims to provide investors with a consistent level of income, annualized at approximately 8.19% before fees and expenses, while offering a buffer against the first 10% of losses in the SPDR S&P 500 ETF Trust (SPY) over a one-year Target Outcome Period. The fund primarily invests in Flexible Exchange Options (FLEX Options) tied to SPY’s price performance and short-term U.S. Treasury securities. It targets an income level through a combination of interest on U.S. Treasuries and premiums on FLEX Options. While it provides a buffer against losses, investors won’t participate in SPY’s positive price returns above the first day of the Target Outcome Period. The targeted income can vary based on market conditions, including interest rates and SPY volatility.