Innovator Capital Management launched the Innovator Uncapped Accelerated U.S. Equity ETF (XUSP) on the Cboe. XUSP will seek to provide investors with exposure to the SPDR S&P 500 ETF Trust (SPY) with a disciplined options overlay strategy.
XUSP is designed to deliver structural alpha, meaning it will seek to provide accelerated and uncapped upside returns over periods when the market returns positively more than performance thresholds.
Innovator designed XUSP to represent a core equity strategy that may forgo a portion of single-digit equity returns in exchange for potentially accelerated and uncapped upside, creating the potential for the outperformance of the price return of SPY over the long term. The new rules-based Managed Outcome ETF will not have an upside cap, potentially allowing investors to particularly benefit from “right tail” return environments for large-cap stocks.
Additionally, XUSP will not use leverage to implement its investment strategy.
Innovator believes that advisors could use the options-based ETF within the core of an equity portfolio in place of mandates to active stock fund managers over the long term. In addition to being used as part of a strategic asset allocation framework, XUSP could also be employed by an advisor more tactically to express a bullish view on the prospects for domestic large-cap stocks.
XUSP does not seek to time the market or select individual stocks, sectors, or factors that may outperform SPY.
“A number of advisors we speak to have expressed a desire for an investment strategy that could potentially outperform SPY in positive markets, but without relying on an active manager’s stock selection skill or their ability to correctly time the market,” said Bruce Bond, CEO of Innovator ETFs, in a news release. “With the Uncapped Accelerated U.S. Equity ETF, we feel we’ve designed such a fund.”
Bond added that XUSP “is intended to be part of an equity portfolio that can potentially provide outperformance of the price return of SPY during positive returning stock market environments. We believe such an uncapped strategy could fit in a strategic, long-term framework as part of the core of an investor’s portfolio.”
XUSP will have an annual management fee of 0.79%. The prospectus can be found here.
Milliman Financial Risk Management will be the fund’s subadvisor.
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