PGIM Nasdaq-100 Buffer January ETF (PQJA)

Overview

PQJA is an investment fund designed to moderate losses on shares of the Invesco QQQ Trust (QQQ) over a designated one-year period, beginning each January. The fund employs a strategy that allows for limited upside participation beyond a specific threshold, which is reset annually. This strategy aims to safeguard against the initial 12% of losses incurred by QQQ, while also recognizing that gains above the cap will not be realized. The fund’s protection mechanisms primarily rely on options, which are based on the price of QQQ rather than the total return version, hence excluding dividends from its protection scope. In the event that QQQ's value drops more than 12%, the fund will suffer losses equivalent to any further declines. It is crucial for investors to hold the fund until the end of the outcome period to attain the anticipated results. Additionally, those who invest outside of the designated annual reset day may encounter altered protection levels and buffer zones. Interim levels for the cap are made publicly available on the issuer's website, though it’s important for investors to account for the fund's expense ratio when considering targeted caps and buffers.

Products and Services

• Options Strategy

  PQJA utilizes FLEX options exclusively to create a protective strategy that mitigates the first 12% of losses on QQQ. This careful selection of options aims to offer a cushion against market volatility while limiting the fund's upside potential.

• Annual Reset Mechanism

  The fund features an annual reset mechanism every January, which recalibrates the thresholds for both loss protection and caps on potential gains. This ensures that investors are provided with a refresh on their risk management strategy annually.

• Loss Mitigation

  Investors benefit from a structured approach to loss mitigation, wherein any depreciations in QQQ shares beyond 12% will result in one-to-one losses for the fund. This structured risk allowance allows for a predictable framework for assessing potential outcomes.

• Public Disclosures

  The fund maintains transparency by publishing interim levels for the expected cap and noted buffer zones on their website, which supports investors in staying informed about the performance and structural changes of their investments.

• Expense Considerations

  Investors are advised to consider the fund's expense ratio, as the targeted cap and buffer do not encompass these costs. This element is critical in understanding the net protection and expected returns of the investment.