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Defined Outcome ETF Primer

The significant growth of defined outcome ETFs amid volatile markets

Recent market volatility has increased demand for defined outcome ETFs, also known as target outcome ETFs, which offer downside protection in exchange for capped upside potential. These funds have experienced rapid growth, with assets rising to $22 billion by January 2023 from $183 million in December 2018, and the number of products expanding to 169 from fewer than 10.


Investors should exercise a bit of caution because these types of ETFs may underperform in strong markets due to their trade-off between protection and upside. The benefits of defined outcome ETFs are realized only at the end of the designated period – and trading them before this can lead to discrepancies between actual and expected performance.


Download this report now to see how Morningstar evaluates defined outcome ETFs by assessing personal risk tolerance, market expectations, and investment horizon.

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What's Inside:

  • A deep dive into defined outcome ETFs and how they protect investors from losses. 

  • A review of the performance and possible drawbacks of defined outcome ETFs. 

  • Important factors to consider for defined outcome investing. 

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