The folks at a 33-year-old, $241-billion-AUMS (as of August 30), Midwestern fund firm are teaming up yet again with those at a 12-year-old, $35.2-billion-AUMS (as of June 30) ally that specialists in "defined outcome investing."

Ryan O. Issakainen First Trust Portfolios L.P. Senior Vice President, ETF Strategist

Last Thursday (September 26), Ryan Issakainen, senior vice president and ETF strategist at First Trust Advisors L.P. [profile], and Jeff Chang, president of Vest Financial LLC, unveiled the launch of the FT Vest Laddered Internationanl Moderate Buffer ETF (BUFY on the Cboe BZX). Wheaton, Illinois-based First Trust serves as the new fund's investment advisor, while McLean, Virginia-based Vest serves as subadvisor.

BUFY's inception date was last Wednesday (September 25), and the ETF comes with an expense ratio of 100 basis points (baking in a 10bps fee waiver promised through December 31, 2025). The actively managed, non-diversified fund had $4.014 million in AUM as of yesterday (September 30).

Two of Vest's managing directors, Howard Rubin and Karan Sood, will serve as BUFY's portfolio managers. The ETF is built out of a laddered portfolio of a $376-million-AUM ETF suite: the four FT Vest International Equity Moderate Buffer ETFs, target outcome ETFs intended to provide capped exposure to an international equity strategy while using options to protect against the first 15 percent of losses over one-year periods. Those underlying ETFs are: YDEC, which debuted in December 2020 and now has about $67 million in AUM; YMAR, which debuted in March 2021 and now has $99 million in AUM; YJUN, which debuted in June 2021 and now has $171 million in AUM; and YSEP, which debuted in September 20212 and now has $39 million in AUM.

Chang puts the launch of BUFY in the context of "a steady increase in demand for risk-diversified buffer investments since 2016." Issakainen observes that "relative valuations for international equities have grown significantly more attractive over the past few years."

"Today's launch of BUFY may be attractive to investors seeking a risk-diversified way to participate in some of the upside potential of the iShares MSCI EAFE ETF with a level of protection against losses," Chang states. "BUFY offers a convenient built-in laddered approach that recalibrates a portion of the investment to the prevailing levels of EFA on a rolling basis."

"We believe BUFY will be an effective tool for investment professionals seeking exposure to international stocks with lower volatility and some level of downside protection via its underlying ETF holdings," Issakainen states.

BUFY is a series of the First Trust Exchange-Traded Fund VIII. The new fund's other service providers include: the Bank of New York Mellon as administrator, custodian, fund accounting agent, and transfer agent; Chapman and Cutler LLP as counsel; Deloitte & Touche LLP as independent accounting firm; and First Trust Portfolios L.P. as distributor. 

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