WHY CONSIDER BUFFER ETFs
In a world of increased market uncertainty, many investors are looking for ways to participate in the stock market's upside while tempering its downside risks. Amid elevated market volatility, buffer ETFs are gaining popularity as they seek to limit losses in exchange for investors accepting a cap on their market gains. This tradeoff results in a narrower range of potential return outcomes that may allow investors to better meet their goals.
There is no guarantee the Fund will meet its investment objectives. The cap and buffer, and the Fund’s value relative to each, should be considered before investing in the Fund.
For illustrative purposes only. There is no guarantee that the downside protection sought by a buffer or floor will be successful.1 The Fund seeks to produce a range of potential returns (a “target outcome”) based upon the performance of the Underlying ETF. The returns sought by the Fund, which include downside protection (a “buffer”) against the first 12% or 20% (before fees and expenses) of Underlying ETF losses and an upside limit on share price return of the Underlying ETF (a “cap”) (before fees and expenses), are based on the price performance of the Underlying ETF over an approximate one-year period (the “Target Outcome Period”).
PGIM Buffer ETF Offerings
PGIM Buffer ETF Offerings
|ETF Market Price ($)
|ETF Return (Market Price) (%)
|Ref. Asset Return (%)
|Remaining Cap (%)
|Remaining Buffer (%)
|Downside Before Buffer (%)
|Ref. Asset Return to Cap (%)
|Remaining Outcome Period (Days)
Performance quoted represents past performance, which is no guarantee of future results. Investment returns and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted. Returns less than one year are cumulative. One cannot invest directly in an index. For standardized performance and the most recent month-end performance, visit the fund’s profile page by clicking on the ticker symbols above.
Due to the Fund's strategy, the returns an investor will receive from an investment in the Fund have characteristics that are distinct from many other investment vehicles, including the Underlying ETF. It is important an investor understands the Fund characteristics before making an investment in the Fund. To achieve the target outcomes sought by the Fund for the Target Outcome Period, an investor must hold Fund shares for that entire Target Outcome Period. There can be no guarantee these results will be achieved. The cap and buffer, and the Fund's value relative to each, should be considered before investing in the Fund.
The PGIM Buffered ETF series are sub-advised by PGIM Quantitative Solutions (PQS) through a highly experienced portfolio management team with 17 years of investment experience and $96.7 billion in assets under management as of June 30, 2023.
PGIM QUANTITATIVE SOLUTIONS at a glance
$96.7BAssets under management
17Average years of investment experience
$1.2TAUM of parent company, PGIM
Source of all data: PGIM, unless noted otherwise. Source of Outcome Period Data: ETF Global.
ETF Return (Market Price) %: the ETF performance since the start of the outcome period as of the latest timestamp.
Ref. Asset Return (%): the reference asset price return performance since the start of the outcome period as of the latest timestamp.
Remaining Cap (%): the cumulative maximum potential return available at the ETFs current price if held to the end of the current Outcome Period as of the latest timestamp.
Remaining Buffer (%): the current amount of downside protection the ETF seeks to provide if held to the end of the outcome period as of the latest timestamp.
Downside Before Buffer (%): The amount of ETF loss incurred before the buffer begins. This amount of downside before buffer will fluctuate during the outcome period based on the ETFs performance. For example, if the ETF performance is negative for the outcome period, then the downside before buffer will equal 0%.
Ref. Asset Return to Cap (%): the minimum reference asset return needed for the fund to realize the cap as of the latest timestamp.
Remaining Outcome Period (Days): the amount of days remaining until the last day of the Outcome Period.
ETF shares are not individually redeemable from the Fund. Shares may only be redeemed directly from the Fund by Authorized Participants in creation units only.
The Fund invests in FLEX Options which subjects the Fund to the risks of losing its premium paid for the option or that the price of the underlying reference asset drops significantly below the exercise prices and the Fund’s loses are substantial. Flex Options are also subject to the risk that they may be less liquid than other securities, including standardized options. FLEX Options are subject to trading risks and valuation risks because they are market traded and centrally cleared by the OCC. The Fund is designed to deliver returns that approximate the Underlying ETF if Fund shares are bought on the first day of a Target Outcome Period and held until the end of the Target Outcome Period, subject to the buffer and the cap. If an investor purchases Fund shares after the first day of a Target Outcome Period or sells shares prior to the expiration of the Target Outcome Period, the returns realized by the investor will not match those that the Fund seeks to provide.
The Fund is subject to buffered loss risk in which there can be no guarantee that the Fund will be successful in its strategy to provide downside protection against Underlying ETF losses; cap change risk in which the cap may rise or fall from one Target Outcome Period to the next and is unlikely to remain the same for consecutive Target Outcome Periods; and capped upside risk where the Fund will not participate in gains in the Underlying ETF beyond the cap. The Fund is subject to Underlying ETF risk in which the value of an investment in the Fund will be related to the investment performance of the Underlying ETF. Therefore, the principal risks of investing in the Fund are closely related to the principal risks associated with the Underlying ETF. As an exchange traded fund (ETF), the Fund is subject to risks involved with: ETF shares trading risk (including the risk of the shares trading at a premium or discount to net asset value or the lack an active trading market); authorized participant concentration risk; and the risk of transacting in cash versus in-kind.
As a new and relatively small fund with limited operating history, the Fund is subject to the risk that its performance might not represent how it may perform long term and investments may have disproportionate impact on performance. The Fund may be exposed to equity and equity-related securities, where the value of a particular security could go down resulting in a loss of money; large capitalization companies which may go in and out of favor based on market and economic conditions; derivative securities, which may carry market, credit, and liquidity risks; and futures and forward contracts. Derivatives are subject to counterparty risk, which is the risk that the other party in the transaction will be unable or unwilling to fulfill its contractual obligation, and the related risks of having concentrated exposure to such a counterparty.
The Fund is subject to management risk in which the subadviser will apply investment techniques and risk analyses in making investment decisions for the Fund, but the subadviser’s judgments about the attractiveness, value or market trends affecting a particular security, industry or sector or about market movements may be incorrect and liquidity risk in which the Fund may invest in instruments that trade in lower volumes and are more illiquid than other investments. Certain transactions in which the Fund may engage may give rise to leverage which could result in increased volatility of investment return.
The Fund intends to qualify as a regulated investment company (“RIC”) under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended (the “Code”); however, the federal income tax treatment of certain aspects of the proposed operations of the Fund are not clear, including the tax aspects of the Fund’s options strategy (including the distribution of options as part of the Fund’s in-kind redemptions), the possible application of the “straddle” rules, and various loss limitation provisions of the Code.
The Fund is subject to market risks, including economic risks, as well as market disruption and geopolitical risks (the value of investments may decrease, and international conflicts and geopolitical developments may adversely affect the U.S. and foreign financial markets, including increased volatility). The Fund is non-diversified for purposes of the 1940 Act. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund. Large shareholders could subject the Fund to large scale redemption risk. These risks may increase the Fund’s share price volatility. The risks associated with the Fund are more fully explained in the Fund's prospectus and summary prospectus. There is no guarantee the Fund’s objective will be achieved.
The Funds have characteristics unlike many other traditional investment products and may not be suitable for all investors. The Funds are designed to deliver returns that approximate the underlying asset if Fund shares are bought on the first day of a Target Outcome Period and held until the end of the Target Outcome Period, subject to the buffer and the cap. If an investor purchases Fund shares after the first day of a Target Outcome Period or sells shares prior to the expiration of the Target Outcome Period, the returns realized by the investor will not match those that the Fund seeks to provide. The Fund is subject to buffered loss risk in which there can be no guarantee that the Fund will be successful in its strategy to provide downside protection and capped upside risk where the Fund will not participate in gains in the underlying asset beyond the cap.
Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their net asset value (NAV), and are not individually redeemed from a Fund. Shares may only be redeemed directly from the Funds by Authorized Participants in creation units only. You may incur brokerage commissions when buying and selling shares on an exchange or through your financial intermediary, which may reduce returns. Market returns are based upon the closing price or the midpoint of the bid/ask spread, as applicable, at the time when the Fund’s NAV is determined (normally 4:00 P.M. Eastern time), and do not represent the returns you would receive if you traded shares at other times. There can be no guarantee that an active trading market for ETF shares will develop or be maintained, or that their listing will continue or remain unchanged. While the shares of ETFs are tradable on secondary markets, they may not readily trade in all market conditions and may trade at significant discounts in periods of market stress. Fixed income investments will change in value based on changes in interest rates, and their value generally will decline as interest rates rise; Diversification does not assure a profit or protect against loss in declining markets. These risks may increase a Fund’s share price volatility. There is no guarantee a Fund’s objective will be achieved. The risks associated with the Funds are more fully explained in each Fund’s prospectus and summary prospectus.
NAV prices are used to calculate market price performance prior to the date when the fund first traded on its listing exchange. Market price performance is determined using the close at 4:00 P.M. Eastern time, when the NAV is typically calculated. Since shares of each Fund did not trade in the secondary market until after the Fund inception, for the period from inception to the first day of secondary trading, the NAV of the Fund is used as a proxy for the market price to calculate market returns. Closing Market Price is determined using the midpoint between the highest bid and the lowest offer reported to the consolidated tape, as of the time that the Fund NAV is calculated. In the event this is not available, the midpoint between the highest bid and the lowest offer on the listing exchange is used. NAV Price (Net Asset Value) is total assets less total liabilities divided by the number of shares outstanding. Bid/Ask Spread is the amount by which the ask price exceeds the bid price for an asset in the market. The Bid/Ask Spread is essentially the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept to sell it. Premium/Discount is the percent difference between the Market price and the NAV price. There is no guarantee you will receive the stated Premium/Discount and additional fees may result from individual broker fees and transaction costs in the secondary market. Each Fund is subject to management fees and other expenses. The trading prices of a Fund’s shares in the secondary market generally differ from the Fund’s daily NAV and are affected by market forces such as supply and demand, economic conditions and other factors. Information regarding the indicative intraday value of shares of the Fund, also known as “iNAV,” is disseminated every 15 seconds throughout the trading day by the national securities exchange on NYSE Arca or by market data vendors or other information providers. The iNAV is based on the sum of the current value of the Fund’s portfolio holdings that were publicly disclosed prior to the commencement of trading that day and may not reflect Fund expenses or other components used to determine the Fund’s current NAV. Therefore, the iNAV should not be viewed as a “real-time” update of the Fund’s NAV, which is computed only once a day. The Fund is not responsible for the calculation or dissemination of the iNAV and makes no representation or warranty as to the accuracy of the iNAV.
Source: NYSE, Bank of New York Mellon, Lipper, Inc., and PGIM, Inc (PGIM). PGIM is a Prudential Financial company. All returns assume share price changes as well as the compounding effect of reinvested dividends and capital gains. Returns may reflect fee waivers and/or expense reimbursements. Without such, returns would be lower. All returns 1-year or less are cumulative.
Consider a fund's investment objectives, risks, charges, and expenses carefully before investing. The prospectus and summary prospectus contain this and other information about the fund. Contact your financial professional for a prospectus and summary prospectus. Read them carefully before investing.
Investment products are distributed by Prudential Investment Management Services LLC, a Prudential Financial company, member SIPC. PGIM, Inc. (PGIM) is a registered investment advisor and a Prudential Financial company. PGIM Quantitative Solutions is the primary business name of PGIM Quantitative Solutions LLC, a wholly owned subsidiary of PGIM. © 2024 Prudential Financial, Inc. and its related entities. PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
Investment Products: Are not insured by the FDIC or any other federal government agency, may lose value, and are not a deposit of or guaranteed by any bank or any bank affiliate
For compliance use only 1077033-00001-00