Defining Outcomes: A Smarter Way to Stay Invested
Defined Outcome ETFs can provide a simple, cost-effective way to remain invested in equity markets, with built-in protection against potential market downturns.
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Information for Investors in Switzerland
This is an advertising document. The state of the origin of the fund is Ireland. In Switzerland, the representative is 1741 Fund Solutions AG, Burggraben 16, CH-9000 St.Gallen. The paying agent is Tellco Bank AG, Bahnhofstrasse 4, 6430 Schwyz.
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Who
Who might use them?
Why Consider them
Why consider a defined Outcome strategy?
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A brief history
From complex hedging to smart simplicity
How They Work
Three simple building blocks
How they work
Why Consider them
Who might use them
Final thought
Final thought
Historically, hedging against market downturns typically meant using costly, complex tools like structured notes or hedge funds – often the preserve of institutions. During periods such as the 2008 global financial crisis¹ or the Covid-19 crash², only some of the funds that implemented uncorrelated strategies provided a way of preserving capital.
However, these strategies often came with:
Stay invested The strategy is invested in the S&P 500 index, providing equity market exposure.
Add a downside buffer Built-in protection (by buying and selling put options) against a predefined level of loss, for example the first 5% or 15%, within a defined period, such as a quarter of a year.
Introduce an upside cap To offset the cost of protection, an out-of-the-money (OTM) call option is sold. This limits any potential upside participation up to the cap, such as 5% quarterly or 12% annually.
Laying the Foundations: The Building Blocks of a Defined Outcome Strategy
Performance in Perspective: Defined Outcome in Action
Equity markets are inherently uncertain, and investor goals often involve balancing participation in long-term growth with a level of downside buffer over shorter, volatile periods.
Even if investors understand the general principle of staying invested for the long term, it can be hard for many to stomach pronounced short-term dips and selling at precisely the wrong time.
By combining equity participation with built-in buffers and caps, Defined Outcome ETFs can support a more resilient and intentional approach to investing — across market cycles.
Investor need Equity market exposure but worried about risks to the downside Navigating uncertainty (e.g. macro/policy uncertainty risks) Lower risk appetite within equities
How Defined Outcome can help Retains equity exposure while reducing downside risk Provides a defined cushion during volatile periods Reduces equity volatility whilst staying invested
Defined Outcome ETFs can offer a compelling solution for uncertain markets. Whether looking to hedge against a potential downturn or simply invest more defensively, these ETFs could help you stay in the market, with a level of protection and clarity that traditional tools can’t match.
Discover the ETF with a 5% Buffer
What If? How a Defined Outcome Strategy Performs in Different Markets
The Defined Outcome Experience - Hypothetical Scenario Analysis 1,2 (5% Quarterly Buffer Example)
Defined Outcome ETFs can potentially help address this by:
Diversify portfolios beyond traditional asset allocation
Transparent, liquid and cost effective
Diversified returns profile without bond dependency
Protection from tail risk events
Stay invested in core equity markets, with protection
Smoother ride through market volatility
Tactical or strategic tool to reduce portfolio beta
Today, innovations in the ETF market and trading technology have changed the landscape.
Defined Outcome ETFs now bring these strategies to a much wider range of investors with valuable attributes such as daily liquidity, full transparency and low costs.
Core investor benefits
Key terms explained plain and simple
Term Put option
Call option
Buffer
Outcome period
What it means
The right to sell an underlying asset to another party at a fixed price over a specific period of time The right to buy an underlying asset from another party at a fixed price over a specific period of time The level of loss you’re protected from (e.g. first 5% or 15%).
The defined timeframe (usually quarterly or annually) during which the buffer and cap apply
KEY
TERMS
Marketing Communication. Capital at risk. For professional investors only. Past performance does not predict future returns.
Together, these building blocks can create a defined exposure: market gains up to the cap, with protection against losses with the downside buffer.
Explore how Defined Outcome strategies have performed across different market conditions from 2020 to 2025, demonstrating how buffers may help smooth returns year by year.
Source: Global X ETFs illustration utilising data from Bloomberg from 31/12/2019 to 14/07/2025 for the Cboe S&P 500 Annual 15% Buffer Protect Index (SPBFA Index). The performance data quoted represents past performance. Past performance does not guarantee future results. There is no guarantee that any trends observed in this material will continue. Any views and opinions are based on current market conditions and are subject to change.
Source: 1. Upside potential will vary every quarter upon the initiation of new options contracts.; 2. Hypothetical Scenarios are based on the S&P 500 Price Return Index and does not take into account dividends, transaction costs, or the fees of the fund.
The Hedge Fund Journal, An Industry Still in Crisis (August 2009) & The Hedge Fund Journal, Managed Futures - Riding the Wave (October 2017).
Mercer, Impact of COVID-19 is there still diversification in hedge funds? (Accessed August 2025) & Hedge Fund Research, HFRI Indices March 2020 performance notes (July 2020)
CFA Institute, Hedge Fund Strategies - 2025 Curriculum (Accessed August 2025)
IBID
Growth Capital Ventures, Hedge Funds Explained (Accessed August 2025)
How Defined Outcome ETFs fit in a portfolio:
60/40 portfolio investors seeking to diversify their exposures further may find a Defined Outcome strategy useful.
Investors who are more risk averse and looking to initiate or maintain an investment in U.S. equity markets may find that a Defined Outcome strategy can help provide a “smoother ride”.
Can replace or complement existing low volatility factor strategies to obtain the potential for more explicit volatility reduction.
Investors anticipating a potential downturn in equity markets may find Defined Outcome Strategies useful as a tactical implementation. If the investor is incorrect about a downturn, they still would maintain a level of upside participation.
Technical complexity demanding active management and specialist knowledge⁴
High costs through management and performance fees³
Limited access reserved for institutional investors⁵
Replace a portion of equity exposure to reduce volatility
Take a more defensive position without moving to cash
