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‘Buffer’ ETFs Prove a Decent Bond Alternative in War-Hit Markets

Buffer ETFs, a $80 billion defined‑outcome fund category, are emerging as a bond alternative amid volatile markets and rising Treasury yields. The largest vehicle, FT Vest Laddered Buffer ETF, fell only 1.4% in March versus a 2.7% drop in the S&P 500, illustrating its downside‑protection promise. Advisors and endowments, such as the University of Connecticut, are shifting to these options‑based funds after bonds proved unreliable as hedges during the Iran war and 2022 rate‑spike sell‑offs. Critics caution that the trade‑off may lower long‑term returns.