The bond market’s risk/reward profile has never been less favorable for investors; interest rate risk is near all-time highs, while yields hover near all-time lows.
In the upcoming webcast, Feeling Like It’s Time to Get Out of Bonds? Here’s Your Strategy, Bruce Bond, Co-Founder and CEO, Innovator ETFs; and Graham Day, Vice President of Product and Research, Innovator ETFs, will highlight a new bond alternative to help financial advisors navigate the challenging fixed income market.
Specifically, Innovator Capital Management recently launched the Innovator Defined Wealth Shield ETF (BALT). Listing on the Cboe, BALT will use options on SPY (SPDR S&P 500 ETF Trust) in seeking to provide exposure to the equity market to a cap while targeting a significant buffer against losses in SPY each calendar quarter.
BALT provides investment returns by allowing investors to participate in the upside of the equity markets with a significant buffer against losses, but it does not provide fixed income typical of bonds. The Innovator Defined Wealth Shield ETF seeks to offer advisors a defensive investment strategy intended as an alternative to cash, short-term debt, and core bond strategies common in traditional portfolio construction and conservative allocations.
The ETF targets a 20% buffer every 3-month outcome period. The ETF can be held indefinitely, resetting at the end of each outcome period. While the ETF targets a 20% buffer, it could range from 15% to 20%.
With bond yields near historic lows and money market funds yielding less than .1%, Innovator believes that BALT – with its measured quarterly upside potential to SPY – could be a compelling alternative to short-term treasuries, bond funds, and cash on the sidelines for advisors looking to sidestep the negative portfolio impacts offered by the current low-rate yield environment.
Financial advisors who are interested in learning more about the alternative strategy can register for the Thursday, August 5 webcast here.