Innovator S&P 500 Defined Outcome ETFs
Innovator intends to issue a quarterly series of each Defined Outcome ETF to provide investors an opportunity to purchase shares as close to the beginning of their respective Outcome Periods as possible. Investors will also be able to purchase shares of a previously listed Defined Outcome ETF throughout the entire Outcome Period; and obtain a current set of defined outcome parameters, which are disclosed daily through a web tool for each Fund developed by Innovator (see “Interim Period Shareholders” below).
Each Innovator S&P 500 Defined Outcome ETF seeks to provide investors defined exposure to the S&P 500, where the downside protection level, upside growth potential to a Cap, and Outcome Period are all known, prior to investing. The Funds will invest substantially all of its assets in FLexible EXchange® (FLEX®) Options on the S&P 500. FLEX Options are customizable exchange-traded option contracts guaranteed for settlement by the Options Clearing Corporation.
Defined Outcome Investing
Defined outcome investing seeks to target a specific defined payoff profile, with an allowance for a specific defined level of risk, at a specific point in time in the future. This approach to investing has been available for decades, largely through certain bank and insurance products. The defined outcomes sought by the Innovator Defined Outcome ETFs are comparable to certain equity-linked investment strategies often used by other product structures like structured notes and structured annuities1—spaces with more than $1 trillion collectively in the U.S. alone. As large as the structured product space has become, it has historically been accessed by institutional and high net worth investors.
Innovator has 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 products (e.g., downside protection levels, defined outcome parameters), but with the added benefits of transparency, liquidity and lower costs afforded by the ETF structure.
Formed in 2014, Innovator Capital Management is currently led by ETF visionaries Bruce Bond and John Southard, founders of one of the largest ETF providers in the world. Innovator Capital Management partnered with several of the world‘s leading financial institutions (e.g., Cboe, S&P Global, and Milliman Financial Risk Management) to harness advancements in financial technology to build the Innovator Defined Outcome ETFs.
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