The iShares Large Cap Max Buffer Jun ETF limits upside to 11% while shielding investors from losses over a 12-month period.
BlackRock’s iShares Large Cap Max Buffer Jun ETF (NASDAQ:MAXJ) offers full downside protection for the S&P 500 but caps gains at 11% annually. The fund achieved a 7% return last year, lagging SPY’s 20% gain due to its structured payoff limits.
MAXJ uses an options overlay, holding 108% of net assets in IVV and a $13.9 million short derivative position with Susquehanna Financial Group. Protective puts shield against losses, while sold calls fund the protection by capping upside. The buffer resets annually in June, with a 10.6% cap set at launch on July 1, 2024.
Long-term investors may overpay for the protection, as SPY’s five-year return of 74% outpaces MAXJ’s constrained performance. Pairing IVV with a Treasury ETF offers similar safety at lower cost while preserving upside potential.