Episode summary
Buffer ETFs, Income Strategies & Electricity Futures
ETF Prime
· · 50 min · Guests: Ben Sklar, Bill Perkins
Summary
AllianceBernstein’s Ben Sklar argued that buffer ETFs are designed to simplify defined-outcome investing by internalizing the calendar management, downside protection, and upside resets that many investors struggle to monitor on their own. He highlighted the firm’s three buffer funds—moderate, conservative, and international—and said their key differentiators are evergreen structure, shorter 3-month outcome periods, and a ratchet feature that resets the buffer and cap if markets rally sharply mid-period. He also framed the products as tools for investors who want systematic protection without having to manage vintage selection or frequent rebalancing themselves.
Sklar also previewed the upcoming premium income ETF, INK, describing it as a combination of direct indexing and systematic options designed to target a 10% to 12% annual distribution while still allowing some capital appreciation. He said the strategy is meant for equity investors seeking higher distributions, especially in retirement or near-retirement portfolios, rather than as a fixed income substitute. Later, Bill Perkins of Skyharbor Capital Management made the case for the firm’s new Skylar Electricity Futures ETF, MWHS, saying AI, reshoring, and robotics could drive a long-term bull case for electricity demand. He argued that futures offer a direct way to express that view, especially when power prices and supply constraints may be moving higher over time.
Key takeaways
- Sklar said AllianceBernstein’s buffer ETFs use 3-month outcome periods and a ratchet feature to keep protection and upside more current than traditional vintage-based buffers.
- Sklar argued that buffer funds are less about beating a 60/40 portfolio on paper and more about helping investors stick with a disciplined process during market swings.
- Sklar said the forthcoming INK premium income ETF targets a 10% to 12% annual distribution and is intended for equity investors, not as a fixed income replacement.
- Perkins said MWHS gives investors direct exposure to U.S. electricity futures and is designed around the thesis that AI, reshoring, and robotics will lift power demand.
- Perkins said the biggest risk to the electricity thesis is timing, especially if data-center demand is delayed by moratoriums, permitting issues, or political pushback.
Notable quotes
“Getting investors to systematically buy their losers and sell the winners is a challenging thing to do”
“we think having the ratchet with these shorter outcome periods helps deliver more of what the investor expects in a buffered strategy”
“this is not designed as a cash replacement”
“the demand for income-generating strategies is is tremendous, bordering on unrelenting for for the last several years”
“I think we're going into a decade bull case on power demand”
How the episode opens
Getting investors to systematically buy their losers and sell the winners is a challenging thing to do.
All right, joining me will be Ben Sclar, portfolio manager index and derivative solutions at AllianceBernstein, who currently offers 23 ETFs, nearly $21 billion in assets. Of course, AllianceBernstein is a 900-plus billion-dollar asset manager overall, but they have a growing lineup of ETFs that spans equities, fixed income, and alternative strategies. And that lineup has taken in about $6 billion in new money this year.
These are all actively managed products, including a suite of buffer ETFs, which is where we'll be focusing our conversation. Obviously, as you can tell from Ben's title, he's deeply involved in derivative solutions at AllianceBernstein. And so, we're going to look at these buffer ETFs and discuss how they're different from existing solutions on the market.
And then, we'll also discuss a forthcoming premium income ETF that's set to launch in November. And we'll talk about how AllianceBernstein is thinking about that category. Now, later I'll be joined by Bill Perkins, founder and chief investment officer at Skyharbor Capital Management, who back in June, they launched the first of its kind ETF, which I always love covering these.
And that's the Skyharbor Electricity Futures ETF, ticker MWHS. This is the first ETF providing direct exposure to US electricity futures contracts. And this comes at a time when there's a lot of conversation and debate around how the country will power the growing number of AI data centers.
And so, I'm going to have Bill walk through the current US electricity market and how it's structured and how AI is impacting that. We'll obviously spotlight the ETF itself. And then I want to get into how electricity futures compared to other ways to play growing electricity demand.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- buffer etfs
- premium income etfs
- electricity futures etfs
- ai and robotics demand
- etf income strategies
Companies and tickers mentioned
- AllianceBernstein
- Skylar Capital Management
Watch the episode
Watch “Buffer ETFs, Income Strategies & Electricity Futures” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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ETF Prime, this episode and its artwork belong to Nate Geraci. Octagon is not affiliated with the show; this page is an independent summary.
