Competitively priced at 0.50%, new funds are among lowest-cost buffer ETFs in the marketplace
PGIM,1 the $1.4 trillion global investment management business of Prudential Financial, Inc. ((PRU) launches the PGIM S&P 500 Max Buffer ETF series, the PGIM Nasdaq-100 Buffer 12 ETF series and the PGIM Laddered Nasdaq-100 Buffer 12 ETF ("the ETFs").
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Stuart Parker, President and CEO, PGIM Investments (Photo: Business Wire)
The ETFs will be offered at a 0.50% net expense ratio, placing them among the lowest-cost buffer ETFs in the marketplace.2
- The PGIM S&P 500 Max Buffer ETF series seeks to provide investors with returns that match those of the SPDR® S&P 500® ETF Trust ("SPY") up to a predetermined upside cap (of at least 3%) while seeking to maximize downside protection against SPY's losses over each ETF's one-year target outcome period. The series seeks to provide 100% downside protection, with a dynamic 3% minimum cap provision. The series will consist of 12 ETFs, each listed monthly on the Cboe BZX.
- The PGIM Nasdaq-100 Buffer 12 ETF series seeks to provide investors with returns that match the price return of the Invesco QQQ Trust℠, Series 1 ("QQQ") up to a predetermined upside cap, while providing a downside buffer against the first 12% (before fees and expenses) of QQQ's losses over each ETF's target outcome period.3 The series will consist of four ETFs, each listed on the Nasdaq.
- The PGIM Laddered Nasdaq-100 Buffer 12 ETF ("PBQQ") seeks to provide investors with capital appreciation and equally invests in each of the quarterly PGIM Nasdaq-100 Buffer 12 ETFs. PBQQ is listed on the Nasdaq.
"Investors are increasingly looking for defined outcome solutions that provide upside market exposure and downside protection," said Stuart Parker, PGIM Investments president and CEO. "The expansion of our buffered ETF suite makes our offering one of the most comprehensive in the market and is emblematic of our mission to deliver products in line with investor needs."
The ETFs are subadvised by PGIM Quantitative Solutions (PGIM Quant), the quantitative equity and multi-asset specialist of PGIM.
"We're thrilled to partner with PGIM Investments on the launch of these new buffered products," said Linda Gibson, CEO of PGIM Quantitative Solutions. "The ETFs not only leverage our subadvisory capabilities, but also our deep expertise in solutions-based investing and decades of experience managing options trading strategies for investors."
PGIM's expanded offering of buffer ETFs also includes the 12% and 20% U.S. Large Cap buffer ETF series and two laddered funds of buffer ETFs launched last year. Learn more about PGIM's growing ETF suite, which spans fixed income, equity, and multi-asset class solutions, here.
ABOUT PGIM INVESTMENTS
PGIM Investments LLC and its affiliates offer more than 100 funds globally across a broad spectrum of asset classes and investment styles. All products draw on PGIM's globally diversified investment platform that encompasses the expertise of managers across fixed income, equities, alternatives and real estate.
ABOUT PGIM QUANTITATIVE SOLUTIONS
PGIM Quantitative Solutions is the quantitative equity and multi-asset specialist of PGIM. For 50 years, PGIM Quantitative Solutions has helped investors around the world solve their unique needs by leveraging the power of technology and data as well as advanced academic research. PGIM Quantitative Solutions manages $103 billion in client assets.*
ABOUT PGIM
PGIM is the global asset management business of Prudential Financial, Inc. ((PRU). In 42 offices across 19 countries, our more than 1,400 investment professionals serve both retail and institutional clients around the world.
As a leading global asset manager, with $1.4 trillion in assets under management,* PGIM is built on a foundation of strength, stability, and disciplined risk management. Our multi-affiliate model allows us to deliver specialized expertise across key asset classes with a focused investment approach. This gives our clients a diversified suite of investment strategies and solutions with global depth and scale across public and private asset classes, including fixed income, equities, real estate, private credit, and other alternatives. For more information, visit pgim.com.
Prudential Financial, Inc. (PFI) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom, or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. For more information please visit news.prudential.com.
*As of Sept. 30, 2024.
1 The term PGIM as used in this announcement includes PGIM Investments LLC, an indirect, wholly owned subsidiary of Prudential Financial, Inc.
2 Source: Morningstar Direct as of Nov. 30, 2024.
3 Certain series may have an initial target outcome period of less than one year. Future target outcome periods will be for one-year periods.
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.
PGIM S&P 500 Max Buffer ETFs Fund Risks
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 losses 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; buffer and 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 the Fund may have a buffer significantly below 100% in certain 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 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 of 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 will be indirectly 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; and derivative securities, which may carry market, credit, and liquidity risks. 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.
PGIM Nasdaq-100 Buffer 12 ETF Risks
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 losses 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 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 of an active trading market); authorized participant concentration risk; and the risk of transacting in cash versus in-kind. The Fund is subject to technology sector risk, in that the Underlying ETF's assets may be concentrated in the technology sector and may be more affected by the performance of the technology sector than a fund that is less concentrated.
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 will be indirectly 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; and derivative securities, which may carry market, credit, and liquidity risks.
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.
PGIM Laddered Fund Risks
The Fund is a "fund of funds" and is subject to Underlying ETF and QQQ risks, in that the value of an investment in the Fund will be related to the investment performance of the Underlying ETFs and, in turn, QQQ. Therefore, the principal risks of investing in the Fund are closely related to the principal risks associated with the Underlying ETFs and its investments. Exposure to the Underlying ETFs will also expose the Fund to a pro rata portion of the Underlying ETFs' fees and expenses. The fluctuating value of the FLEX Options will affect the Underlying ETFs' value and, in turn, the Fund's value. The Fund intends to generally rebalance its portfolio to equal weight (i.e., 25% per Underlying ETF) quarterly, in connection with the reset of the cap of each Underlying ETF. In between such rebalances, market movements in the prices of the Underlying ETFs may result in the Fund having temporary larger exposures to certain Underlying ETFs compared to others. Exposure to the Underlying ETFs will also expose the Fund to a pro rata portion of the Underlying ETFs' fees and expenses.
The Underlying ETFs invest in FLEX Options and, to the extent that the Underlying ETF writes or sells an option, if the decline or increase in the underlying asset is significantly below or above the exercise price of the written option, the Underlying ETF and, in turn, the Fund could experience a substantial or unlimited loss. FLEX Options are also subject to the risk that they may be less liquid than other securities, including standardized options; trading risks, as they are required to be centrally cleared; and valuation risks.
The Fund's risk include, but are not limited to, target outcome period risk, where in the event the Fund acquires shares of an Underlying ETF after the first day of a Target Outcome Period or disposes of shares prior to the expiration of the Target Outcome Period, the value of the Fund's investment in Underlying ETF shares may not be buffered against a decline in the value of QQQ and may not participate in a gain in the value of QQQ for the Fund's investment period; buffered loss risk, in which there can be no guarantee that the Underlying ETFs will be successful in its strategy to provide downside protection against losses; cap change risk, in which a new cap for an Underlying ETF is established at the beginning of each Target Outcome Period and is dependent on prevailing market conditions and is unlikely to remain the same for consecutive Target Outcome Periods; and capped upside risk, in that since the Fund will acquire shares of the Underlying ETFs in connection with creations of new shares of the Fund and during each quarterly rebalance, the Fund typically will not acquire Underlying ETF shares on the first day of a Target Outcome Period. In the event that the Fund acquires Underlying ETF shares after the first day of a Target Outcome Period and the Underlying ETF has risen in value to a level near or at the cap, there may be little or no ability for the Fund to experience an investment gain on those Underlying ETF shares; however, the Fund will remain vulnerable to downside risks. The Fund is subject to technology sector risk, in that the Underlying ETF's assets may be concentrated in the technology sector and may be more affected by the performance of the technology sector than a fund that is less concentrated.
As an actively managed 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 of an active trading market); authorized participant concentration risk; and the risk of transacting in cash versus in-kind. 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); and portfolio turnover risk, in that the Fund's turnover rate may be higher than that of other ETFs which may involve expenses and lead to the realization of capital gains.
As a new and relatively small fund, the Fund's performance may not represent how the Fund is expected to or may perform in the long term. Large shareholders could subject the Fund to large-scale redemption risk. Your actual cost of investing in the Fund may be higher than the expenses shown in the expense table for a variety of reasons. There is no guarantee the Fund's objective will be achieved. The risks associated with the Fund are more fully explained in the Fund's prospectus and summary prospectus.
Investment products are distributed by Prudential Investment Management Services LLC, member FINRA and SIPC. PGIM Quantitative Solutions is a wholly owned subsidiary of PGIM. © 2025 Prudential Financial, Inc. and its related entities. PGIM, PGIM Quantitative Solutions, 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 federal government agency, may lose value, and are not a deposit of or guaranteed by any bank or any bank affiliate.
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