Buffer ETFs Deliver Strong Returns Despite Market Turbulence

Wall Street is seeing stocks get slammed like a bad Yelp review, but Buffer ETFs are still getting five stars for resilience. These specialized funds use options strategies to limit both gains and losses, making them a go-to during selloffs. Their popularity only surged further last week, with investors pouring in $393M in new inflows as they scrambled for shelter from President Trump’s tariff storm.

• Nicknamed “boomer candy” for their appeal to retirement-age investors, buffer ETFs have exploded from just $200M in assets in 2018 to ~$53B today.
• The average investor dollar in buffer ETFs earned 10.7% annually over the five-year period ending Feb. 2025, outperforming the ETFs’ own aggregate total return of 9.4%.

Buyer beware: Not everyone’s impressed with the buffer ETF boom. AQR Capital Management’s Daniel Villalon claimed these strategies deliver “investment failure” by underperforming simple stock/Treasury combinations. He further noted, “The vast majority of these funds have neither kept up with equities, nor have they protected investors from the downside risk.” Additionally, their analysis found that only 14% of buffer strategies outperformed a basic portfolio mixing S&P 500 exposure with Treasury bills, while 81% experienced worse drawdowns than this traditional approach. While defenders argue these products provide valuable certainty for retirees and nervous investors, critics maintain you’re paying premium fees (averaging 0.77%) for what could be achieved more cheaply with traditional allocation funds.