A more dovish Federal Reserve and interest rate cuts in 2019 could pave the way for gains in emerging markets. The timing couldn’t be any more auspicious for Innovator Capital Management, LLC (Innovator), who announced plans to expand the category creating Innovator Defined Outcome ETFs suite with two additional Buffer ETFs based on the MSCI EAFE and the MSCI Emerging Markets Indexes.
Developed to provide investors buffered exposure to leading international equity benchmarks, the two new ETFs are anticipated to list on the NYSE Arca on July 1, 2019.
“Based on advisor feedback, we are moving forward to provide Buffer ETFs with MSCI EAFE and Emerging Markets exposures,” said Bruce Bond, CEO of Innovator ETFs. “We believe the availability of Defined Outcome ETFs based on these broad benchmark indexes will provide the investment community with better tools to manage international equity risk, and may be particularly useful for investors looking to reduce the home equity bias that exists in many portfolios today.”
Anticipated return profiles for the Innovator MSCI EAFE and MSCI Emerging Markets Buffer ETFs – July Series, as of 6/13/19
|Ticker||Name||Buffer Level||Cap range*||Outcome Period|
|EJUL||Innovator MSCI Emerging Markets Power Buffer ETF||15.00%||TBD (to be determined)|| 12 months
7/1/19 – 6/30/20
|IJUL||Innovator MSCI EAFE Power Buffer ETF||15.00%||TBD|| 12 months
7/1/19 – 6/30/20
The actual Cap for each Fund will be set at the beginning of the Outcome Period, and is dependent upon market conditions at that time. Periods of high market volatility could result in higher caps, and lower volatility could result in lower caps. “Cap” refers to the maximum potential return, before fees and expenses and any shareholder transaction fees and any extraordinary expenses, if held over the full Outcome Period. “
Buffer” refers to the amount of downside protection the fund seeks to provide, before fees and expenses, over the full Outcome Period. Outcome Period is the intended length of time over which the defined outcomes are sought. Upon fund launch, the Caps can be found on a daily basis via www.innovatoretfs.com. EJUL and IJUL are not yet available for investment.
The Innovator Defined Outcome Suite of ETFs
MSCI Emerging Markets:
- Innovator MSCI Emerging Markets Power Buffer ETF (NYSE: EJUL): Designed to track the return of the MSCI Emerging Markets Price Index (up to a predetermined Cap) while buffering investors against the first 15% of losses over the Outcome Period, before fees and expenses.
- Innovator MSCI EAFE Power Buffer ETF (NYSE: IJUL): Designed to track the return of the MSCI EAFE Price Index (up to a predetermined Cap) while buffering investors against the first 15% of losses over the Outcome Period, before fees and expenses.
S&P 500 Buffer ETFs:
- Innovator S&P 500 Buffer ETFs (Cboe: BJUN, BAPR, BJUL, BOCT, BJAN): Designed to track the return of the S&P 500 (up to a predetermined Cap) while buffering investors against the first 9% of losses over the Outcome Period, before fees and expenses.
- Innovator S&P 500 Power Buffer ETFs (Cboe: PJUN, PAPR, PJUL, POCT, PJAN): Designed to track the return of the S&P 500 (up to a predetermined Cap) while buffering investors against the first 15% of losses over the Outcome Period, before fees and expenses.
- Innovator S&P 500 Ultra Buffer ETFs (Cboe: UJUN, UAPR, UJUL, UOCT, UJAN): Designed to track the return of the S&P 500 (up to a predetermined Cap) while buffering investors against a decline of 30% of losses over the Outcome Period, from -5% to -35%, before fees and expenses. Investors are exposed to loss between 0% and 5% and over 35% over the Outcome Period, before fees and expenses.
Each Innovator Defined Outcome ETFsm seeks to provide a defined exposure to a broad market index (such as the S&P 500, MSCI EAFE or MSCI EM) where the downside buffer level, upside growth potential to a Cap, and Outcome Period are all known, prior to investing.
Innovator recently began expanding its suite of S&P 500 Buffer ETFs into a monthly series to provide investors more opportunities to purchase shares as close to the beginning of their respective Outcome Periods as possible. Investors can purchase shares of a previously listed Defined Outcome Buffer ETF throughout the entire Outcome Period, obtaining a current set of defined outcome parameters, which are disclosed daily through a web tool available here.
Innovator is focused on delivering defined outcome based solutions inside the benefit-rich ETF wrapper, retaining many of the features that have contributed to the success of structured products1 (e.g., downside buffer levels, upside participation, defined outcome parameters), but with the added benefits of transparency, liquidity and lower costs afforded by the ETF structure.
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