Innovator Capital Management has launched the Innovator IBD Breakout Opportunities ETF (BOUT US) on NYSE Arca.
Bruce Bond, Chief Executive Officer of Innovator Capital Management.
The fund provides investors with exposure – via the IBD Breakout Stocks Index – to the Investor’s Business Daily (IBD) signature breakout investing methodology, which has roots dating back to research conducted by the publication’s founder in the 1950s.
The underlying reference index is designed to identify US stocks poised to “breakout”. A breakout refers to a stock price experiencing a period of sustained growth beyond its recent “resistance level”, usually accompanied by increased trading volumes on the security.
Chris Gessel, Chief Content Officer of IBD, commented, “Investor’s Business Daily’s founder William O’Neil began researching breakout stocks in the late 1950s. During more than a half century of research and investing, compiling charts on the best stock market winners of each market cycle, O’Neil found the biggest winners often started their moves the same way, with a stock breakout.”
The index methodology begins by identifying companies that have strong fundamental indicators and uses a chart pattern recognition algorithm to select stocks for inclusion that are at or nearing breakout points.
The methodology weights constituents using a composite score based upon the security’s IBD Composite Ranking and Relative Price Strength Rating with those firms with higher composite scores receiving larger weights.
The index includes a minimum of 25 stocks – there are currently 56 constituents – and is rebalanced and reconstituted on a weekly basis.
Bruce Bond, Chief Executive Officer of Innovator Capital Management, said, “While many ETFs focus on stocks with established momentum, the Innovator IBD Breakout Opportunities ETF (BOUT) seeks to identify companies before they have established momentum, and may offer investors unique exposure that can be utilized as an alternative or complement to momentum ETFs.
“Identifying stock breakouts from a sound chart pattern is a good way to improve the timing for investing in growth companies, and to participate in potential big stock market winners.”
The fund comes with an expense ratio of 0.80% and is the third ETF offered by Innovator to be driven by IBD’s investment research.
The Innovator IBD 50 Fund (FFTY US) tracks the IBD 50 Index which targets 50 growth stocks within the US equity universe of securities trading on either NYSE or Nasdaq. Stocks with stronger growth characteristics, as determined by IBD’s proprietary methodology, are assigned a higher weight in the index. It houses over $540 million in AUM and has an expense ratio of 0.80%.
The other fund is the Innovator IBD ETF Leaders ETF (LDRS US) which tracks the IBD ETF Leaders Index, composed exclusively of other ETFs. With a heavy focus on technical indicators, the index selects strong performing ETFs that, according to the underlying research, are likely to continue their gains. The underlying ETFs include funds targeting US equities, international equities, fixed income and money markets. LDRS comes with an expense ratio of 0.60% and has nearly $50m in AUM.