Methodology
How the Enhanced Cost Ratio (ECR) score is calculated
What is the ECR?
The Enhanced Cost Ratio is a single score that measures how well a Buffer ETF is performing relative to its original outcome period parameters. A higher ECR means the ETF is offering better value right now — more protection, more upside, or both — adjusted for how much time is left in the outcome period.
The Three Components
The ECR combines three factors, each measuring a different aspect of the ETF's current health:
1. Downside Before Buffer (DBB) Score
When there is no downside exposure, the score is 1.0. Larger drawdowns are penalized more aggressively — small losses reduce the score modestly, while deeper losses cause it to drop sharply toward zero.
2. Buffer Integrity
Measures the effective buffer protection remaining after accounting for any current downside exposure. The result is floored at zero so the score never goes negative.
3. Cap Integrity
Measures how much upside potential remains, capped at 1.0 so the score never exceeds full integrity. This component is not applicable for Digital Return ETFs (which have no cap), and their weight is redistributed to the other two components.
Weight Profiles
| Profile | Downside Before Buffer | Buffer Integrity | Cap Integrity |
|---|---|---|---|
| Neutral | 33.34% | 33.33% | 33.33% |
| Bullish | 20% | 10% | 70% |
| Bearish | 40% | 40% | 20% |
Data Source
All data is refreshed hourly (8:00 AM – 6:00 PM ET) from First Trust Portfolios. The dataset covers all First Trust Buffer ETF strategies including Buffer, Conservative Buffer, Deep Buffer, and Moderate Buffer.