Innovator launches December series of S&P 500 ‘defined outcome’ ETFs

Dec 2nd, 2019 | By | Category: Alternatives / Multi-Asset

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

Innovator launches December series of S&P 500 ‘defined outcome’ ETFs

Innovator Capital has rolled out a December series of its S&P 500 defined outcome ETF suite.

The three funds are the Innovator S&P 500 Buffer ETF – December (BDEC US), the Innovator S&P 500 Power Buffer ETF – December (PDEC US), and the Innovator S&P 500 Ultra Buffer ETF – December (UDEC US).

All three funds have been listed on Cboe BZX Exchange.

“The December series of S&P 500 Buffer listings continues our monthly rollout of S&P 500 Buffer ETFs to provide advisors the broadest flexibility in managing market risks,” said Bruce Bond, CEO of Innovator ETFs.

“We believe the defined outcome ETF value proposition, which allows investors to take advantage of the market’s upside growth while maintaining very specific buffer levels against loss, provides advisors with a powerful means to differentiate their practice and build more enduring client relationships.”

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 December series have caps of 13.3%, 8.6%, and 7.4%, 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%.

Innovator initially launched four quarterly series of S&P 500 Buffer ETFs but has since begun rolling out funds for each month of the year. The suite currently consists of nine monthly series and houses approximately $2.0 billion in assets under management.

The funds’ warm reception from investors has not gone unnoticed by rival ETF providers. Last month, First Trust began introducing its first Buffer ETFs with the launch of a November series of S&P 500 defined outcome funds. Its ETFs come with expense ratios of 0.85%.

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