Defined outcome ETFs offer buffered equity exposure.
Defined outcome ETFs provide downside buffering and can act as an on-ramp for investors who want equity exposure but are worried about risk. The category tripled in size during 2022 and has grown about 40% per year for five years; BALT is cited as an example of a defined outcome ETF that can provide that buffer and diversification.
Derivative income ETFs grow fastest and yield income.
Derivative income is the fastest-growing active ETF category, growing about 80% per year for the last five years. Premium income ETFs like GPIC and GPIX provide consistent income and some downside protection versus benchmarks, making them tools for income-oriented investors.
Investors want income while keeping exposure to well-known Nasdaq 100 companies, and the derivative income category has grown about 80% a year for the last five years; QQQI uses a covered call strategy to deliver that income in an ETF wrapper while maintaining portfolio exposure.