In times of market uncertainty, investors can lean on alternative strategies to better ride out heightened volatility and turbulence.
In the upcoming webcast, Pursuing Systematic Alpha and Managing Risk, Tim Urbanowicz, head of research and investment strategy at Innovator ETFs; Sean Kommerstad, portfolio strategist for the Gradient Global Tactical Rotation Index, Two Rivers Capital Consulting LLC; and Michael Binger, president of Gradient Investments LLC, will highlight a tactical, risk-managed strategy that can help financial advisors and investors mitigate risk and pursue capital appreciation.
The recently launched Innovator Equity Managed Floor ETF (NYSE Arca: SFLR) can help deliver U.S. equity upside and income potential while limiting a shareholder’s potential for maximum loss through a sophisticated options overlay. The active strategy is sub-advised by Parametric Portfolio Associates.
SFLR’s portfolio consists predominantly of S&P 500 Index stocks, with the sub-advisor implementing a representative sampling strategy to efficiently gain exposure to returns of the referenced index. As part of the equity sampling methodology, SFLR will seek to provide investment income, distributing dividends from the portfolio’s stock holdings back to fund shareholders.
Through a custom-developed, laddered options strategy, SFLR will target a maximum loss of roughly 10% on a rolling 12-month basis. The laddered options strategy employed by SFLR seeks to maximize upside potential. This should allow investors to participate in high-returning environments more fully for the fund’s large-cap domestic stock benchmark.
“SFLR does not seek a defined outcome. Rather, the investment strategy… seeks to reduce volatility and limit downside risks, while seeking upside participation,” according to Innovator ETFs.
According to a Securities and Exchange Commission exempted relief filing, Innovator ETFs is working on the Innovator Gradient Tactical Rotation Strategy ETF (NYSEArca: IGTR), an actively managed ETF that seeks to provide excess returns over the S&P Global BMI utilizing a rules-based investment process. Gradient Investments and Penserra Capital Management both serve as investment sub-advisors to the fund.
IGTR identifies the global equity market segment that is displaying the strongest price momentum metrics based on a rules-based, two-factor approach to create tactical investment opportunities. The fund first defines the investable universe by identifying three broad-based geographic equity markets, including the U.S. markets, international developed markets, and emerging markets. Secondly, the fund identifies four factors, including high beta or securities that fluctuate to a greater degree when compared to other securities in an equity market; momentum or securities that have had stronger recent performance compared to other securities, on the basis that these securities will continue to increase in value; neutral broad market or securities of issuers with expansive geographic coverage for market diversification that generally fluctuate consistent with broad market conditions; and low volatility or securities that fluctuate to a lesser degree when compared to other securities in an equity market.
Financial advisors who are interested in learning more about the risk-managed investment strategy can register for the Tuesday, November 15 webcast here.