What is JULZ? (Pros, Cons, and Strategies)

As investors look to diversify their portfolios and secure their financial future, many turn to structured outcome ETFs like JULZ. The TrueShares Structured Outcome (July) ETF offers a unique blend of potential growth with downside protection, making it an appealing option for those cautious about market volatility. In this blog post, we'll explore what JULZ is, along with its advantages, disadvantages, and strategies for investment.

What is JULZ?

JULZ stands for the TrueShares Structured Outcome (July) ETF. It's designed to provide investors with exposure to the U.S. stock market while offering a predefined downside buffer and upside cap over a one-year period from its initial offering each July.

Key Features of JULZ

• Predefined Downside Buffer: JULZ aims to buffer losses up to a certain percentage, typically around 15%, over the outcome period (one year).
• Upside Cap: To balance the downside protection, there's an upside cap on the gains you can achieve within the outcome period.
• Defined Outcome Period: JULZ operates on a one-year outcome period starting each July.
• Flexible Structure: While focusing on a specific outcome period, the structure rolls over every year, providing a new set of buffers and caps.

JULZ employs a sophisticated options strategy using FLEX (Flexible Exchange) options to achieve these predefined outcomes. This mix of options enables the ETF to offer buffered losses and capped gains.

JULZ Composition

The fund’s assets are primarily invested in a mix of S&P 500 Index ETFs and FLEX options. The options strategy is critical in helping JULZ achieve its goal of limiting potential losses while participating in market gains, up to the preset cap.

Pros of JULZ

Downside Protection

One of the most compelling features of JULZ is its predefined downside buffer. Investors who are wary of market volatility might find the downside protection appealing, as it helps to limit losses up to a certain percentage.

Defined Outcome Strategy

JULZ offers clarity and predictability through its defined outcome strategy. Investors know exactly what their exposure will be, which can help mitigate investment uncertainty.

Consistent Market Participation

While JULZ caps the upside, it still offers market participation, enabling investors to benefit from broader market movements without the full exposure to market downturns.

Cons of JULZ

Upside Cap

The predetermined upside cap can be a significant drawback, especially in bull markets. Investors might find themselves missing out on substantial gains if the market performs exceptionally well within the outcome period.

Complexity

The use of FLEX options might be complex for average investors to fully understand. This complexity can make it difficult for investors to grasp all the nuances of the ETF’s strategy.

Annual Reset

Every July, the terms reset, meaning the downside buffer and upside cap will change based on market conditions. This annual reset requires continuous monitoring and understanding of the new terms.

JULZ Investment Strategies

Given its unique structure, JULZ might not fit into every portfolio, but there are strategic ways to incorporate it based on your financial goals and risk tolerance.

Long-term Safety and Growth

If you’re looking for a more stable vehicle within your long-term investment portfolio, JULZ can provide both market exposure and a safeguard against significant losses. While it won’t offer the unrestricted upside of conventional equity ETFs, the defined downside buffer can add a layer of security over multiple market cycles.

Complementary Investment

Consider using JULZ alongside other investment vehicles. For example, pairing it with a high-growth ETF or individual stocks can balance the capped growth of JULZ with the higher potential returns of other riskier assets.

Tactical Allocation

JULZ can be a part of a tactical asset allocation strategy. For instance, during times of anticipated market turbulence or downturns, shifting a portion of your portfolio into JULZ can provide better risk-adjusted returns.

Systematic Investment Approach

Much like with any other structured product, maintaining a systematic investment approach, where you regularly contribute to JULZ regardless of market conditions, can benefit from the defined outcomes over multiple periods. This ensures that you capture varying market conditions within the predefined risk-return framework.

Conclusion

JULZ represents an intriguing option for those seeking to blend market participation with a layer of predictability and downside protection. While the predefined upside cap might deter some high-risk investors, the downside buffer can offer peace of mind for more conservative investors or those nearing retirement. By understanding the pros, cons, and strategic applications of JULZ, you can make a well-informed decision about how it might fit into your investment portfolio.