Auto Callable ETFs Overview - Auto callable ETFs are new and complex products gaining popularity due to high dividend/coupon payments [1] - These ETFs democratize investing by making complex strategies, previously exclusive to wealthy individuals via structured notes, accessible to retail investors [4] - Auto callable ETFs function like bonds with income and principal payments tied to equity market performance above specific levels [5] Key Features and Risks - Auto callables offer higher monthly coupons than traditional fixed income but with capped upside potential [6] - A significant market decline could suspend coupon payments and, in severe cases, result in principal loss [6] - Key terms include the referenced index, coupon barrier (e g 30% or 40%), and principal barrier [7] Specific ETF Products - Calamos launched the first auto callable ETF, backed by JP Morgan, with over 400 million in assets [8] - The Calamos ETF replicates a portfolio of auto callable notes linked to the S&P 500, specifically the Mercube US Large Cap Wall Advantage Index, holding a ladder of about 52 notes maturing weekly [9] - Calamos also launched another ETF linked to the NASDAQ 100 with a 30% coupon barrier, while the S&P 500 linked ETF has a 40% barrier [12] - Innovator launched an auto callable ETF (ACII) holding laddered swaps linked to the S&P 500 (SPY), NASDAQ 100 (QQQ), and small-cap ETF (IWM), with performance tied to the worst-performing index and a 30% barrier [15] Performance and Suitability - The Calamos product tracks the Mercube index, which has slightly underperformed the S&P 500 since inception but has similar performance over the past 10 years [19] - These ETFs are suitable for investors needing high income, with a neutral to slightly bullish market outlook, comfortable capping upside for steady payouts [16][17]