Innovator expands ‘defined outcome’ S&P 500 ETF suite

Jun 3rd, 2019 | By | Category: Alternatives / Multi-Asset

Innovator Capital has launched three new ETFs which form the June series of the firm’s S&P 500 ‘defined outcome’ suite.

Innovator starts phase two of S&P 500 Buffer ETFs

The funds provide varying levels of downside protection on the S&P 500, while allowing investors to maintain a degree of upside participation.

The three funds are the Innovator S&P 500 Buffer ETF – June (BJUN US), the Innovator S&P 500 Power Buffer ETF – June (PJUN US), and the Innovator S&P 500 Ultra Buffer ETF – June (UJUN US).

All three funds have been listed on Cboe BZX Exchange.

Each monthly series in the suite consists of three ETFs providing exposure to the bellwether S&P 500 Index with distinct levels of downside protection.

The Buffer and Power Buffer funds provide protection on the first 9% and 15% of losses, respectively, over a period of approximately one year, while the Ultra Buffer fund protects against losses between -5% and -35%.

The downside protection comes at the expense of a cap on the potential upside of each ETF over the outcome period. The cap for each fund is set at the beginning of the outcome period and is dependent upon market conditions at that time.

The Buffer, Power Buffer, and Ultra Buffer ETFs in the June series have caps of 16.5%, 10.5%, and 10.2%, respectively.

The ETFs gain their exposure through tracking Cboe S&P 500 Target Outcome Indices that have been developed by risk management firm Milliman. The indices consist of S&P 500 FLexible EXchange (FLEX) Options which are customizable exchange-traded option contracts guaranteed for settlement by the Options Clearing Corporation.

Each fund comes with an expense ratio of 0.79%.

“Based on robust investor demand across our Defined Outcome ETF 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.”

Innovator currently offers four series of Buffer funds with starting months dispersed in quarterly increments (January, April, July, and October).

The launch of a June series is the first stage of Innovator’s plan to expand the suite to include a Buffer series for each month of the year.

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