Many investors are looking for ways to generate returns without taking unnecessary risks. Traditional equity investments offer growth potential, but also come with full exposure to market volatility. The ProfitShield system, consisting of Buffer ETFs, offers a solution that combines the best of both worlds. For those seeking a balanced approach, ProfitShield offers protection against large losses while still allowing the opportunity to make a profit. In addition, ProfitShield is a valuable addition to a well-diversified portfolio.
Features
ProfitShield is therefore a system built with Buffer ETFs. These instruments combine the advantages of equity investment with built-in risk mitigation. They track an underlying index up to a predetermined maximum return, allowing investors to benefit from rising markets. In addition, they offer a protection mechanism against losses, which helps limit the risks in falling markets.
Buffer ETFs come in various forms, each with their own characteristics. Some offer protection against the first 10% to 15% of annual losses, with a maximum annual return of approximately 12%. Other variants offer 100% annual protection, but with a lower return of approximately 7%. There are also quarterly variants that absorb smaller losses per quarter, with an adjusted maximum return.
How does ProfitShield work?
The underlying values of this system are the S&P 500 index and the Nasdaq 100 index. The portfolio is built up using a combination of different buffer ETFs. For example, 100% buffer ETFs (100% protection!), 15% buffer ETFs, and other variants. The maximum possible return that can be achieved with ProfitShield will be approximately 12% per year.
Every month, we review how we can optimize risk and return. If we expect a bear market, we will emphasize 100% buffer ETFs in combination with buffer ETFs that can absorb, for example, the first 30% of a decline.
If the market is neutral, we will work more with 15% buffer ETFs, and in a bull market, we will work more with variants that offer 5% protection per quarter with a maximum possible return of 4% per quarter.
Why ProfitShield with Buffer ETFs?
Buffer ETFs are excellent for portfolio diversification and offer added value, which is essential for a balanced investment strategy. Not only do they protect against market losses, but they also reduce portfolio volatility. This makes it valuable to use them with different levels of protection, allowing us to flexibly adjust ProfitShield. Although buffer ETFs sometimes have higher costs, they are often more cost-efficient than actively managed investment funds.
In addition, ProfitShield can be used as an alternative to bonds, especially in a low interest rate environment where bond yields remain limited.
Buffer ETFs can also be an attractive solution for investors who have excess liquidity that they do not need for the time being or at all. Instead of leaving these funds in a savings account with minimal returns, ProfitShield offers the opportunity to generate potential returns with built-in protection against market declines.
In short, ProfitShield has many advantages:
1. Protection. Always a significant buffer against market declines.
2. Return opportunities. Opportunities to roll over certain Buffer ETFs in the interim and benefit from rising markets with a new cap.
3. Diversification. Complement to any portfolio through different dynamics of lower volatility and profit potential.
4. Ease of use. Investors do not need to implement complex investment strategies themselves, as all necessary transactions are carried out automatically within the ETF. This makes Buffer ETFs accessible to both novice and experienced investors.
5. And above all: peace of mind. There is no need to immediately panic when market corrections occur.
Considerations and risks
Although buffer ETFs offer many advantages, there are also some points to consider:
- Currency risk. The ProfitShield system is offered in euros, but has underlying exposure to the US dollar.
- Return ceiling. Investors no longer benefit from price increases above the set ceiling.
- Higher costs. Buffer ETFs have higher average costs (0.8%) than traditional ETFs (average 0.5%).
- Periodic emissions. New buffer levels and caps are set every year or quarter. This depends on market conditions such as volatility and interest rates. When volatility is low, both buffers and caps are normally lower, and vice versa.
Finally
The ProfitShield system, introduced at the beginning of 2024, showed excellent results in its first year of operation. Over 2024, the portfolio achieved a gross return of 12.2%. This result is all the more remarkable because it was achieved without taking into account the favorable dollar exchange rate, which yielded an additional 6% profit during the same period.
The ProfitShield system therefore offers a balanced solution for investors who seek to preserve capital without compromising growth opportunities. After a year in operation, the concept has proven its value by combining stability and potential in a single streamlined investment strategy.
