The July Series of the Innovator MSCI EAFE and MSCI Emerging Markets Buffer ETFs have begun trading on the NYSE Arca, expanding the opportunity for investors seeking to mitigate downside risk and participate in the growth of broad equity markets.
The new ETFs provide exposure to international developed and emerging markets, up to a cap, with downside buffer levels of 15% over a one year outcome period.
The Innovator MSCI Emerging Markets Power Buffer ETF trades under the ticker EJUL and has an expense ratio of 0.89%. The second fund, the Innovator MSCI EAFE Power Buffer ETF, trades under the ticker IJUL and has a slightly lower expense ratio of 0.85%.
“We are pleased to be expanding our Defined Outcome ETF suite with MSCI EAFE and Emerging Markets exposures,” said Bruce Bond, CEO of Innovator ETFs. “The defined outcome ETF space has solved a key challenge by providing the ability for people to stay invested in the stock market, knowing they have upside growth potential and a downside buffer. Today, advisors now have the tools to build globally diversified equity portfolios with measurable downside buffers.”
The Innovator MSCI Emerging Markets Power Buffer and Innovator MSCI EAFE Power Buffer ETFs seek to provide exposure to the price return of their respective indexes up to a Cap, with a downside buffer level of 15%, over an outcome period of approximately one year. The ETFs reset annually and can be held indefinitely.
“Many investors rely on the MSCI EAFE and Emerging Markets Indexes to gain international equity exposure and portfolio diversification, but they often significantly reduce exposure to these markets as they move from their working years toward retirement,” said Matt Kaufman, Principal and Head of Product Development at Milliman Financial Risk Management LLC, Innovator’s subadvisor for the Defined Outcome ETFs. “Investing in international markets with built-in buffers may be a practical solution for this group, which often desires equity market growth, but must also weather drawdowns and portfolio volatility.”
Kaufman said this is the first time investors are able to access international and emerging markets with built-in buffers, in ETF form.
“These are the only ETFs in the world to provide exposure to the benchmark MSCI EAFE Index and MSCI Emerging Markets Index with a built-in buffer of 15% and upside, to a cap,” said Graham Day, Vice President at Innovator ETFs. “The ETFs can be held indefinitely, resetting at the end of each outcome period, approximately annually.”
Adding a downside buffer may provide needed returns with a smoother ride, Kaufman said.
“According to the CMG Capital Group, 75% of all wealth in the U.S. is in the hands of pre-retirees or retirees. These investors no longer require full market upside, the heightened risk of this exposure, nor large market drawdowns,” he said. “Investing with a hedge may provide a practical solution, particularly since we are on the late half of the economic cycle. The Innovator Defined Outcome ETFs’ built-in buffers can help investors weather drawdowns, lower volatility and capture market upside.”
Read more about new ETF launches in our New ETF Category.