Innovator Debuts Latest Defined Outcome ETF | ETF Trends

On Wednesday, Innovator expanded its defined outcome ETF suite with the launch of the Innovator International Developed Power Buffer ETF (IMAY).

The fund is actively managed and has a net expense ratio of 0.85%. It aims to achieve returns similar to those of the iShares MSCI EAFE ETF (EFA).

Primarily, IMAY invests in FLEX options referencing EFA, the underlying ETF. EFA allocates assets to mid- and large-cap companies throughout 21 developed markets across the globe, including Europe, Australia, and Asia. In particular, the fund prospectus said IMAY has notable exposure to companies based in Asia and Europe.

The customizable nature of FLEX options can provide investors with unique opportunities for acquiring returns. These options can also offer less counterparty risk.

Defined Outcome

In order to seek returns for investors, IMAY uses a defined outcome strategy. The first outcome period runs from May 1, 2024 to April 30, 2025. Afterward, the fund invests in a new batch of FLEX options and begins a new outcome period. IMAY aims to ensure further outcome periods will continue to pace the expiration date at approximately the one-year mark.

To help protect investors from potential volatility, the fund applies a buffered strategy. IMAY’s buffer provides downside protection against the first 15% of losses that EFA may endure. However, the downside buffer leaves the fund with an upside cap of 20.95%.

“Innovator has been a pioneer in the defined outcome ETF space. Given how richly valued U.S. equities are relative to the rest of the world, these ETFs offer built-in buffers and exposure to broader global markets, which continue to gain traction this year,” VettaFi Senior Industry Analyst Kirsten Chang noted.

IMAY is the newest contribution to Innovator’s expansive ETF lineup. The issuer currently has 118 ETFs listed in the U.S. These funds represent over $18 billion in assets under management.

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