Innovator expands defined outcome suite with Nasdaq 100 and Russell 2000 ETFs

Oct 1st, 2019 | By | Category: Alternatives / Multi-Asset

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Innovator Capital Management has launched two new ETFs in the US, expanding the firm’s range of ‘defined outcome’ ETFs.

Bruce Bond, Chief Executive Officer of Innovator Capital Management

Bruce Bond, Chief Executive Officer of Innovator Capital Management.

Innovator’s defined outcome ETFs provide exposure to a mainstream equity index while protecting or ‘buffering’ the fund against a pre-determined amount of potential losses.

The ETFs are linked to indices developed by risk management firm Milliman which consists of FLexible EXchange (FLEX) Options – customizable exchange-traded option contracts guaranteed for settlement by the Options Clearing Corporation.

Each fund’s downside protection comes at the expense of a cap on its potential upside over a specified outcome period – one year in the case of the new funds. The cap for each fund is set at the beginning of the outcome period and is dependent upon market conditions at that time.

The new funds are the Innovator Nasdaq-100 Power Buffer ETF (NOCT US) and the Innovator Russell 2000 Power Buffer ETF (KOCT US). They provide exposure to US large-cap and US small-cap equities, respectively, via exposure to FLEX Options based on the Nasdaq 100 and Russell 2000 indices.

The funds buffers against the first 15% of potential losses, while the caps for the Nasdaq 100 and Russell 2000 ETFs are set at 11.1% and 10.8%, respectively, over the period ending 30 September 2020.

Each ETF comes with an expense ratio of 0.79%.

Bruce Bond, CEO of Innovator ETFs, commented, “Based on advisor feedback, we are broadening our Defined Outcome ETF suite today with Buffer ETFs based on the Nasdaq 100 and Russell 2000 Indexes. With equity markets near all-time highs, investors are looking for ways to remain invested but still have a measurable hedge in place to buffer downside risk.”

Innovator currently offers a further three series of Buffer funds based on the S&P 500, MSCI EAFE, and MSCI Emerging Markets indices. The entire line-up has accumulated over $1.3 billion in assets under management.

Bond added, “Innovator now offers a full range of Defined Outcome ETFs, based on key equity benchmarks around the world, providing advisors the tools to build globally diversified equity portfolios with built-in downside buffers against loss.”

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