Innovator launches November ‘defined outcome’ ETF series

Nov 6th, 2019 | By | Category: Alternatives / Multi-Asset

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

Innovator launches November ‘defined outcome’ ETF series

The funds buffer against a pre-determined range of losses at the expense of a cap on upside potential.

The three funds are the Innovator S&P 500 Buffer ETF – November (BNOV US), the Innovator S&P 500 Power Buffer ETF – November (PNOV US), and the Innovator S&P 500 Ultra Buffer ETF – November (UNOV 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 November series have caps of 14.03%, 8.75%, and 7.83%, 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 set out to offer series of Buffer funds with starting months dispersed in quarterly increments (January, April, July, and October).

Due to strong demand for the strategy, the firm has begun to expand the suite to include a Buffer series for each month of the year and currently offers the additional months of June, August, September, and November.

Innovator also offers Buffer ETFs linked to the Nasdaq 100, Russell 2000, MSCI EAFE, and MSCI Emerging Markets indices.

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