Faced with the prospect of lower returns, many investors could be looking for ways to enhance their upside, but some traditional leveraged funds can mean shouldering added risk. However, a new class of ETFs offers investors the potential to magnify equity gains 2x or 3x, up to a cap, without magnifying their downside exposure at the same time, although investors will experience the same loss as the reference asset.
In the upcoming webcast, How to Potentially Accelerate Your Equity Gains, Wes Matthews, director of portfolio solutions at Milliman Financial Risk Management; and Graham Day, vice president of product and research at Innovator ETFs, will look under the hood of the new Accelerated ETFs strategy, which can help investors bolster their equity upside potential without relying on leverage.
Innovator Capital Management, LLC recently launched a new suite of accumulation-oriented Defined Outcome ETFs, or so-called Innovator Accelerated ETFs, the world’s first ETFs to seek to offer a multiple of the upside return of a reference asset, up to a cap, with approximately single exposure on the downside.
As part of Innovator’s Defined Outcome ETF family, the Accelerated ETFs will offer advisors the ability to accelerate a portfolio’s equity performance to a cap over a one-year or three-month outcome period. The Accelerated ETFs represent another ETF industry milestone in Innovator’s path to disrupting the asset management and insurance industries to benefit both advisors and the end-investor.
Specifically, the first batch of the Accelerated ETF suite includes the Innovator U.S. Equity Accelerated ETF – April (XDAP), the Innovator U.S. Equity Accelerated 9 Buffer ETF – April (XBAP), the Innovator U.S. Equity Accelerated ETF – Quarterly (XDSQ), and the Innovator Growth-100 Accelerated ETF – Quarterly (XDQQ).
XDAP will seek to provide investors with double the upside performance of the SPDR S&P 500 ETF Trust (SPY), to a cap, with approximately single exposure to SPY on the downside, over a one-year outcome period.
XBAP will seek to provide investors with double the upside performance of SPY, to a cap, with approximately single exposure to SPY on the downside and a buffer against the first 9% of losses in SPY, over a one-year outcome period.
XDSQ will seek to provide investors with double the upside performance of SPY, to a cap, with approximately single exposure to SPY on the downside, over a three-month, or quarterly, period.
XDQQ will seek to provide investors with triple the upside performance of SPY, to a cap, with approximately single exposure to SPY on the downside, over a one-year outcome period.
The latest batch to come out includes the Innovator US Equity Accelerated ETF – October (XDOC), the Innovator US Equity Accelerated 9 Buffer ETF (XBOC), the Innovator US Equity Accelerated PLUS ETF (XTOC), and the Innovator Growth-100 Accelerated Plus ETF – October (QTOC).
XDOC will seek to provide investors with double the upside performance of SPY, to a cap, with approximately single exposure to SPY on the downside, over a one-year outcome period.
XBOC will seek to provide investors with double the upside performance of SPY, to a cap, with approximately single exposure to SPY on the downside and a buffer against the first 9% of losses in SPY, over a one-year outcome period.
XTOC will seek to provide investors with triple the upside performance of SPY, to a cap, with approximately single exposure to SPY on the downside, over a one-year outcome period.
QTOC will seek to provide investors with triple the upside performance of the Invesco QQQ Trust (QQQ), to a cap, with approximately single exposure to QQQ on the downside, over a one-year outcome period.
Financial advisors who are interested in learning more about strategies to enhance equity exposure can register for the Thursday, November 18 webcast here.