Someone put a buffer ETF in my kitchen. 🗑️

Defined outcome.

Equity hedged.

Derivative income.

Is it the best way to accomplish most investors’ goals?

No. And the math is very clear on that.

Let’s start with fees.

The median net expense ratios by Morningstar category are roughly:

• Derivative income: 0.97%
• Equity hedged: 1.07%
• Defined outcome: 0.79%

If what you want is S&P 500 exposure, you can get that for 0.03%.

Just buy less of it.

Ask yourself one simple question:

“Am I getting something here that I can’t get elsewhere?”

In most cases, the answer is no.

If you can’t handle a 100% stock portfolio (which isn’t even the mathematically optimal portfolio anyway), the solution isn’t to pay high fees for products that give you less equity exposure.

It’s to own less equity.

As an allocator, there are a few things I really don’t like about buffer / defined-outcome ETFs:

• No one actually knows what the equity beta will be in any given year
• If the market is down X%, you’re hedged
• If the market is up X%, you’re capped

Great — now tell me what the market is going to do.

No one knows.

The outcome ends up being no less undefined, just more expensive.

And this doesn’t even touch taxes.

Personally, I’d much rather build a portfolio with higher after-tax risk-adjusted expected returns using:

• Stocks + systematic tax-loss harvesting (direct index or tax-aware long/short)
• High-quality bonds (historically positive in crises like 2008 and the early-2000s tech drawdown)
• Private real estate (up in 7 of the last 8 down years for equities)
• Hedge funds that are genuinely uncorrelated to stocks and bonds

Here’s why this matters.

I recently met a very nice guy in his early 40s.

He’s saving aggressively for retirement and plans to retire in his mid-60s.

His advisor is 67.

He hadn’t looked at his portfolio in years, but knew it was “making money,” so he assumed things were fine.

We opened it up.

• ~10% sitting in cash
• A portfolio littered with buffer ETFs
• High fees
• Reduced equity exposure

Yet his stated goal was long-term growth.

There’s a mismatch there.

Cash plus expensive products designed to mute equity returns is not how you maximize long-term growth over a 20-year horizon.

Good intentions don’t build good portfolios.

Clear goals, clean math, and efficient implementation do.