Buffered ETFs vs Stocks and Cash: EDU #2531

July 30, 2025

Chris’s Summary
Jim and I are joined by Matt Kaufman, Senior Vice President and Head of ETFs at Calamos Investments, to discuss buffered ETFs vs stocks and cash, focusing on AQR’s recent critiques. We examine the flaws in AQR’s methodology, the broader history of buffered products, and why these tools can offer certainty in retirement planning. Matt explains how buffered ETFs differ from accumulation strategies and why they may suit specific roles in a distribution-focused portfolio. We also touch on annuity comparisons and institutional adoption by endowments.

Jim’s “Pithy” Summary
Chris and I welcome back Matt Kaufman from Calamos Investments to talk through the controversy around buffered ETFs. AQR recently published two articles criticizing these tools, and I had some questions—not just about their numbers, but about their motives. If you understand how we use buffered products, especially in retirement distribution, you’ll see why I don’t think these critiques hold up.

We talk about the emotional side of retirement—how people freeze up when they’re supposed to start spending. My dad warned me about the Debbie Downers in his assisted living facility: folks who had money but waited too long and couldn’t spend it anymore. That’s why we look at buffered ETFs as a way to give retirees confidence, not as accumulation tools. When I saw AQR lumping these products together and treating them like they were all the same, it reminded me of the way Ken Fisher says “I hate annuities and so should you.” That kind of broad-stroke bashing doesn’t help anyone.

Matt walks through the technical flaws in AQR’s analysis—especially how they mischaracterized equity exposure and ignored how buffered ETFs are actually used. We compare them to annuities, explain cap rates, and look at why institutions like the University of Connecticut are dropping hedge funds for these products. There’s more nuance here than some people want to admit, and it’s worth taking the time to understand how these work—especially if you’re in retirement and trying to protect the money you spent 40 years building.

Show Notes:

For those who would like to read the AQR articles discussed in this episode you can find them here:
https://www.aqr.com/Insights/Perspectives/Rebuffed-A-Closer-Look-at-Options-Based-Strategies
https://www.aqr.com/Insights/Perspectives/Buffer-Madness