Innovator Capital Management, LLC (Innovator) announced plans to expand its category creating “Defined Outcome ETFsm suite,” moving to a monthly issuance of Innovator S&P 500 Buffer ETFs, beginning with the June Series anticipated to list on the Cboe, June 3, 2019.
“Based on robust investor demand across our Defined Outcome ETFsm suite, we are moving forward with a monthly issuance of Innovator S&P 500 Buffer ETFs to provide advisors with additional return profiles to choose from, and more opportunities to allocate near the beginning of an outcome period,” said Bruce Bond, CEO of Innovator ETFs. “We believe having a broader range of S&P 500 Buffer ETFs available provides investors much greater flexibility in managing portfolios, be it to lock in gains, obtain new buffer levels to mitigate downside risk, or higher upside caps as prevailing market conditions change over time.”
The Innovator S&P 500 Buffer ETFsmsuite 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 an Outcome Period of approximately one year. The ETFs reset annually and can be held indefinitely. Innovator S&P 500 Buffer ETFs, with over $686 million in AUM as of May 14, 2019, are among the fastest growing new category of ETFs in the market today.
Anticipated return profiles for the Innovator S&P 500 Buffer ETFsmJune Series, as of 5/14/19
|Ticker||Name||Buffer Level||Cap range*||Outcome Period|
|BJUN|| Innovator S&P 500|
|9.00%|| 14.16 – 16.51% (gross)|
13.37 – 15.72% (net of management fee)
| 12 months|
6/1/19 – 5/31/20
|PJUN|| Innovator S&P 500|
|15.00%|| 9.26 – 9.94% (gross)|
8.47 – 9.15% (net of management fee)
| 12 months|
6/1/19 – 5/31/20
|UJUN|| Innovator S&P 500|
(-5% to -35%)
| 9.07 – 9.72% (gross)|
8.28 – 8.93% (net of management fee)
| 12 months|
6/1/19 – 5/31/20
* The Cap Ranges above are based on the highest and lowest Cap as illustrated by the Funds’ strategy from 4/5/19 – 5/6/19 and are shown gross and net of the 0.79% management fee. 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. 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. BJUN, PJUN and UJUN are not yet available for investment.
“We anticipate the monthly issuance of Innovator S&P 500 Buffer ETFs will provide asset allocators, ETF strategists, and advisors with greater portfolio modeling capabilities,” added John Southard, Innovator’s Chief Investment Officer. “Developing portfolio strategies using Defined Outcome ETFs with built-in downside buffers against loss can be a very powerful differentiator, and this concept is beginning to resonate in the investment community.”
The Innovator Defined Outcome S&P 500 Buffer ETFsmSuite
Innovator S&P 500 Buffer ETFs (Cboe: BJUN, BAPR, 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: PJUN, PAPR, 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: UJUN, UAPR, 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.
About Innovator Defined Outcome S&P 500 Buffer ETFs
Each Innovator Defined Outcome S&P 500 Buffer ETFSM seeks to provide defined exposure to the S&P 500, where the downside buffer level, upside growth potential to a Cap, and Outcome Period are all known, prior to investing.
Innovator is 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 also purchase shares of a previously listed Defined Outcome Buffer 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/
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.
Interim Period Shareholders
Unlike structured notes, which offer limited liquidity, Innovator Defined Outcome S&P 500 Buffer 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/
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 will be subadvised by Milliman Financial Risk Management LLC (Milliman FRM), a global leader in financial risk management. Milliman FRM was also instrumental in the design of the Cboe S&P 500 Target Outcome Indexes, which the Innovator Defined Outcome 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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