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Innovator Expands Defined Outcome Suite Listing September Series of S&P 500 Buffer ETFs
Traders Magazine Online News, September 10, 2019
Innovator Capital Management, LLC (Innovator) announced today the September Series of Innovator S&P 500 Buffer ETFs™ have begun trading on the Cboe.
“Innovator Defined Outcomes are the only ETFs available today that allow investors to take advantage of market growth while maintaining defined levels of buffers against loss,” said Bruce Bond, CEO of Innovator ETFs. ‘We believe this is a real game changer for the advisor community, providing a fresh approach to risk management, that removes uncertainty from of the investing equation and allows for better alignment of client portfolios with risk tolerance levels in a volatile market environment.”
The Innovator S&P 500 Buffer ETF™ suite seeks to provide investors with exposure to the S&P 500 Price Return Index (S&P 500) up to a Cap, with downside buffer levels of 9%, 15%, or 30% over a one-year Outcome Period. The ETFs reset annually and can be held indefinitely. Innovator Defined Outcome ETFs™, with over $1.25 billion in AUM as of August 30,2019, are among the fastest-growing new categories of ETFs in the market today.
Return profiles for the Innovator S&P 500 Buffer ETF™September Series, as of 9/1/19
Ticker |
Name |
Buffer Level |
Cap * |
Outcome Period |
BSEP |
Innovator S&P 500 |
9.00% |
14.07% |
12 months |
PSEP |
Innovator S&P 500 |
15.00% |
9.39% |
12 months |
USEP |
Innovator S&P 500 |
30.00% |
8.06% |
12 months |
* The Caps above are shown gross of the 0.79% management fee. “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 Periodis 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.
Defined Outcome ETF™ Webinars and Videos
Continuing educational efforts around Defined Outcome ETF investing, Innovator will be hosting its next webinar, titled, “Hedging Downside Risk Today - An RIA’s Perspective on Using Buffered ETFs”, on Sept 10, 2019 at 1pm ET. Additional information including event registration is available using the following link: http://www.innovatoretfs.com/webinars.
Listen to the Innovator Defined Outcome ETFs 101 explainer video by clicking here.
The Funds have characteristics unlike many other traditional investment products and may not be suitable for all investors. For more information regarding whether an investment in the Fund is right for you, please see “Investor Suitability” in the prospectus.
The Innovator Defined Outcome Suite of ETFs
S&P 500 Buffer ETFs:
Innovator S&P 500 Buffer ETFs™ (Cboe: BSEP, BAUG, BAPR, BJUN, 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: PSEP, PAUG, PAPR, PJUN, 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: USEP, UAUG, UAPR, UJUN, 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.
MSCI Emerging Markets:
Innovator MSCI Emerging Markets Power Buffer ETF™ (NYSE: EJUL): Designed to track the price returns of the MSCI Emerging Markets Index (up to a predetermined Cap) while buffering investors against the first 15% of losses over the Outcome Period, before fees and expenses.
MSCI EAFE:
Innovator MSCI EAFE Power Buffer ETF™ (NYSE: IJUL): Designed to track the price returns of the MSCI EAFE Index (up to a predetermined Cap) while buffering investors against the first 15% of losses over the Outcome Period, before fees and expenses.
Interim Period Shareholders
Unlike structured notes, which offer limited liquidity, Innovator Defined Outcome ETFs trade throughout the day on an exchange, like a stock. As a result, investors purchasing shares of a Fund after its launch date may achieve a different payoff profile than those who entered the Fund on day one. Innovator recognizes this as a benefit of the Funds and provides a web-based tool that allows investors to know, in real-time throughout the trading day, their potential defined outcome return profile before they invest, based on the current ETF price and the Outcome Period remaining. Innovator’s web tool can be accessed at http://www.innovatoretfs.com/define.
About Innovator Defined Outcome ETFs™
Each Innovator Defined Outcome ETF™ 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 ETF throughout the entire Outcome Period, obtaining a current set of defined outcome parameters, which are disclosed daily through a web tool available at: http://innovatoretfs.com/define/.
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.
ETF Construction
Each Fund will hold a portfolio of custom exchange-traded FLEX Options that have varying strike prices (the price at which the option purchaser may buy or sell the security, at the expiration date), and the same expiration date (approximately one year). The layering of these FLEX Options with varying strike prices provides the mechanism for producing a Fund’s desired outcome (i.e. Cap or buffer). Each Fund intends to roll options components annually, on the last business day of the month associated with each Fund.
The ETFs are subadvised by Milliman Financial Risk Management LLC (Milliman FRM), a global leader in financial risk management and one of the largest ETF sub advisors. Milliman FRM was also instrumental in the design of the Cboe S&P 500 Target Outcome Indexes, which the Innovator Defined Outcome S&P 500 Buffer ETFs are benchmarked against.
Although each Fund seeks to achieve the defined outcomes stated in its investment objective, there is no guarantee that it will do so. The returns that the Funds seek to provide do not include the costs associated with purchasing shares of the Fund and certain expenses incurred by the Fund.
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