# Buffer ETFs vs Traditional ETFs: What's the Real Trade-off?

Buffer ETFs (aka defined outcome ETFs) are blowing up on Wall Street — went from $3.8B across 13 funds in 2018 to $108.3B across 342 funds by late 2023. But here's the catch: you get downside protection, you lose upside potential.

**The Core Tradeoff:**
They use options contracts to cushion losses. For example: 50% loss protection + 7% return cap. If markets crash 50%, you're safe. If they moon 20%, you only pocket 7%. Miss out on that extra juice.

**The Numbers:**
- U.S. stock market up 80% of the time over any 12-month period since 1970 (avg return: 12.3%)
- S&P 500 dividends added ~2.2% annual returns over 20 years — buffer ETF holders typically don't get these
- Buffer ETF fees: ~0.8% vs traditional ETF at 0.51%

**Who Should Care?**
They're solid if you've got a short time horizon (saving for house down payment, about to retire) and sleep better knowing losses are capped. But long-term investors? You're probably leaving serious money on the table by capping gains.

**Pro Tip:** Buffer ETFs have an "outcome period" (usually 1 year) — buy and hold the full window to get full protections. Sell early and you lose the downside cushion.

Bottom line: Safety comes at a cost. Know your time horizon before you jump in.