On Friday, Innovator Capital Management, LLC launched six new exchange traded funds.
The Innovator International Developed Power Buffer ETF™ – October (IOCT) and the Innovator Emerging Markets Power Buffer ETF™ – October (EOCT) complete the firm’s Power Buffer ETF suite, which aims to provide downside protection and buffers for investors. Meanwhile, four new accelerated ETFs represent the third quarterly series of the accumulation-oriented Defined Outcome ETF suite. The accelerated ETFs are the world’s first ETFs that seek to offer a multiple of the upside return of a reference asset up to a cap. These ETFs include three funds that utilize the reference asset SPY: the Innovator US Equity Accelerated ETF – October (XDOC), the Innovator US Equity Accelerated 9 Buffer ETF (XBOC), and the Innovator US Equity Accelerated PLUS ETF (XTOC). The Innovator Growth-100 Accelerated Plus ETF – October (QTOC) will be based on growth stocks through options on the Invesco QQQ Trust (QQQ).
IOCT and EOCT join with funds such as the Innovator International Developed Power Buffer ETF – January (IJAN) and the Innovator Emerging Markets Power Buffer ETF – Jul (EJUL) in providing investors with upside exposure to foreign developed markets and emerging markets, respectively. Other Innovator Power Buffer ETFs include the Innovator US Equity Power buffer – January (PJAN), the Innovator US Equity Power Buffer ETF – September (PSEP), the Innovator US Small Cap Power Buffer ETF – January (KJAN), and more.
“We believe the International Equity Power Buffer ETFs™ can be powerful risk management tools for advisors seeking to allocate client capital to foreign stocks, whether that is for diversification purposes, to gain exposure to the potential growth of the global economy and/or to take advantage of lower valuations than many benchmarks of domestic equities,” said Bruce Bond, CEO of Innovator ETFs. “With many strategists forecasting higher relative returns from non-U.S. equities over the coming years, many advisors are interested in how they can potentially provide clients with more exposure to foreign stocks but seek to buffer against potential loss and volatility along the way.”
The Cap Ranges above are based on the highest and lowest Cap as illustrated by the Funds’ strategy from 8/24/21-9/22/21 and are shown gross of each fund’s management fee (.85% for IOCT; .89% for EOCT). 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. As a result, the Cap set by each Fund may be higher or lower than the Cap Range. “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. IOCT and EOCT are not yet available for investment.
The four accelerated ETFs include:
- The Innovator U.S. Equity Accelerated ETF™ – October (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.
- The Innovator U.S. Equity Accelerated 9 Buffer ETF™ – October (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.
- The Innovator U.S. Equity Accelerated Plus ETF™ – October (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.
- The Innovator Growth-100 Accelerated Plus ETF™ – October (QTOC) will seek to provide investors with triple the upside performance of QQQ, to a cap, with approximately single exposure to QQQ on the downside, over a one-year outcome period.
Bond said, “As investors digest Wall Street strategists’ calls for lower future equity returns on domestic stocks than we’ve become accustomed to, combined with savers and pre-retirees needs to meet their financial goals for retirement, we’re seeing a lot of advisor interest in the Accelerated ETFs™. While there can be no guarantees what future returns might be, if you are an advisor who believes future equity market returns may be positive but relatively lower compared to recent years, we believe the Accelerated ETFs™ are worth considering investments in. Investors who hold shares for an entire outcome period will have access to potentially double or triple the upside of SPY or QQQ, to a cap, with approximately single exposure on the downside. This means that in instances when SPY or QQQ returns less than the cap over the outcome period and the investor holds the respective Accelerated ETF™ for the entire outcome period, they will have the potential to outperform the respective equity market. We think it’s a very compelling concept that we are seeing more advisors attracted to for a number of reasons.”
**The Average Cap listed above represents an average of estimated caps, as illustrated by the fund’s strategy, based upon 10 previous trading days, from 9/09/2021 to 9/22/2021, and are shown gross of the 0.79% management fee. It does not represent the actual cap that will be set at the beginning of the Outcome Period, which will be 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. As a result, the Cap set by each Fund may be higher or lower than the Average Cap displayed above. The Cap Ranges based on the highest and lowest Cap as illustrated by the Funds’ strategy from 8/24/21-9/22/21 (gross of the 0.79% management fee) are as follows: 15.62% to 17.30% for XDOC; 9.14% to 10.95% for XBOC; 13.99% to 15.57% for XTOC; and 17.34% to 18.95% for QTOC. “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. Investors who purchase shares after the start of an outcome period may be exposed to enhanced risk. XDOC, XBOC, XTOC, and QTOC are not yet available for investment.
For more information, visit innovatoretfs.com.