Innovator Capital Management, LLC (Innovator), the pioneer and
provider of the largest lineup of Defined Outcome ETFs™, today
announced the completion of the firm’s International Equity Power
Buffer ETF™ suite as well as the expansion of the Innovator
Accelerated ETFs™, the world’s first ETFs to seek to offer a
multiple of the upside return of a reference asset (SPY1 or QQQ2),
up to a cap, with approximately single exposure on the downside.
Buffer International Stocks with IOCT
and EOCTToday, Innovator lists the Innovator
International Developed Power Buffer ETF™
– October (IOCT) and the Innovator
Emerging Markets Power Buffer ETF™
– October (EOCT) on NYSE Arca. Using FLEX Options,
IOCT seeks to provide upside exposure to foreign developed stocks,
via EFA3, to a cap, while buffering the first 15% of losses in EFA
over a one-year outcome period. EOCT seeks to provide upside
exposure to emerging market stocks via EEM4, to a cap, while
buffering the first 15% of losses in EEM over a one-year outcome
period.
Cap levels for the new Innovator
International Equity Power Buffer ETFs™
– October series, as of 10/01/21
Ticker |
Name |
Buffer Level |
Cap* |
Outcome Period |
IOCT |
Innovator International DevelopedPower Buffer ETF™ - October |
15.00% |
9.99% |
12 months 10/01/21 – 9/30/22 |
EOCT |
Innovator Emerging MarketsPower Buffer ETF™ - October |
15.00% |
13.89% |
12 months 10/01/21 – 9/30/22 |
* The Caps above are shown gross of each fund’s
management fee (.85% for IOCT; .89% for EOCT). “Cap” refers to the
maximum potential return, before fees and expenses and any
shareholder transaction fees and any extraordinary expenses, if
held over the full Outcome Period. “Buffer” refers to the amount of
downside protection the fund seeks to provide, before fees and
expenses, over the full Outcome Period. Outcome Period is the
intended length of time over which the defined outcomes are sought.
Upon commencement of trading and the outcome period, the Caps can
be found on a daily basis via www.innovatoretfs.com.
IOCT and EOCT will be the final two funds to
round out Innovator’s quarterly issuance of Power Buffer ETFs™ on
international stocks. Because shares must be held for an entire
outcome period to achieve a Defined Outcome ETF™’s stated
investment objective at the outset of the period, quarterly
issuance allows advisors multiple entry points throughout the year
to gain exposure to foreign equities with buffers against loss over
annual outcome periods that start at the beginning of each calendar
quarter, typically aligning with the timing of portfolio
rebalancing, allocation shifts and portfolio management
activity.
“For advisors seeking to allocate client capital
to foreign equities, whether that is for diversification purposes,
to gain exposure to the potential growth of the global economy
and/or to take advantage of lower valuations than many benchmarks
of domestic stocks, we believe the International Equity Power
Buffer ETFs™ can be powerful risk management tools,” Bond
continued. “With most Wall Street strategists forecasting higher
relative returns from non-U.S. stocks over the coming years, a
reversal from the last decade plus of US equity market dominance,
many advisors are interested in how they can potentially provide
clients with more exposure to foreign stocks but seek to buffer
against potential volatility and loss along the way.”
New Accelerated ETFs Seek to Enhance
Equity Returns: XDOC, XBOC, XTOC,
QTOCInnovator also launched four new Accelerated ETFs™ on
the Cboe, its third quarterly series of the accumulation-oriented
Defined Outcome ETF™ suite that are designed to enhance equity
returns. The Accelerated ETFs™ are the world’s first ETFs that seek
to offer a multiple of the upside return of a reference asset (SPY
or QQQ), up to a cap, with approximately single exposure on the
downside.
Today, Innovator has listed the following
Accelerated ETFs™ based on the Large-cap U.S. equity market through
options on SPY (the SPDR S&P 500 ETF Trust):
- Innovator
U.S. Equity Accelerated
ETF™ – October (XDOC)
seeks to provide investors with double the upside performance of
SPY, to a cap, with approximately single exposure to SPY on the
downside, over a one-year outcome period.
- Innovator U.S.
Equity Accelerated 9 Buffer
ETF™ – October (XBOC)
seeks to provide investors with double the upside performance of
SPY, to a cap, with approximately single exposure to SPY on the
downside and a buffer against the first 9% of losses in SPY, over a
one-year outcome period.
- Innovator
U.S. Equity Accelerated Plus
ETF™ – October
(XTOC) seeks to provide investors with triple the
upside performance of SPY, to a cap, with approximately single
exposure to SPY on the downside, over a one-year outcome
period.
Innovator also listed the following Accelerated
ETF™ based on Growth stocks through options on QQQ (the Invesco QQQ
Trust):
- Innovator Growth
Accelerated Plus ETF™ – October
(QTOC) seeks to provide investors with triple the upside
performance of QQQ, to a cap, with approximately single exposure to
QQQ on the downside, over a one-year outcome period.
Bond continued, “As investors grapple with most
investment strategists’ calls for lower future equity returns on
domestic stocks than we’ve become accustomed to, combined with
savers and pre-retirees needs to meet their financial goals for
retirement, Innovator has seen a lot of advisor interest in the
Accelerated ETFs™. Though there can be no guarantees what future
returns might be, if you are an advisor who believes equity market
returns may be positive but relatively lower compared to the
post-Global Financial Crisis era, we believe the Accelerated ETFs™
are worth considering investing in. Simply put: Investors who hold
shares for an entire outcome period will have access to potentially
double or triple the upside of SPY or QQQ, to a cap, with
approximately single exposure on the downside. This means that in
instances when SPY or QQQ returns less than the cap over the
outcome period and the investor holds the respective Accelerated
ETF™ for the entire outcome period, they will have the potential to
outperform the respective equity market. We think it’s an
attractive concept that we are witnessing more advisors gravitating
to for a number of reasons.”
The October series of the Innovator
Accelerated ETFs™ are as follows in the table below:
Ticker |
Reference Asset |
Upside to Cap |
Downside |
Cap** |
Outcome Period |
Listed |
XDOC |
SPY |
2X |
1X |
17.28% |
Annual |
10/1/21 |
XBOC |
SPY |
2X |
1X, 9% Buffer |
10.98% |
Annual |
10/1/21 |
XTOC |
SPY |
3X |
1X |
16.47% |
Annual |
10/1/21 |
QTOC |
QQQ |
3X |
1X |
19.80% |
Annual |
10/1/21 |
** “Cap” refers to the maximum potential return,
before fees and expenses and any shareholder transaction fees and
any extraordinary expenses, if held over the full Outcome Period.
“Buffer” refers to the amount of downside protection the fund seeks
to provide, before fees and expenses, over the full Outcome Period.
Outcome Period is the intended length of time over which the
defined outcomes are sought. Upon fund launch, the Caps can be
found on a daily basis via www.innovatoretfs.com. Investors who
purchase shares after the start of an outcome period may be exposed
to enhanced risk.
The Accelerated ETFs™ are not like leveraged
ETFs, which typically seek to provide a magnified exposure on both
the upside and the downside on a daily basis and can compound risk
with higher volatility when held long-term due to their frequent,
often daily, rebalancing. Instead, the Accelerated ETFs™ seek to
provide asymmetrical returns over either a typically annual or
quarterly outcome period that are magnified on the upside only, to
a cap. Innovator’s Accelerated ETFs™ will rebalance annually or
quarterly, making the funds more suited for asset allocation and
longer-term investors rather than tools for ultra-tactical trading.
In the Accelerated ETFs™ case, it is important to note that
investors must hold shares for an entire outcome period to achieve
the enhanced returns that a fund seeks to provide.
While the Funds are designed to participate in
the reference ETF (SPY or QQQ) losses on a one-to-one basis over
the duration of the outcome period as a whole, a decrease in the
value of the reference asset’s share price may cause a decrease in
the Fund’s NAV while an outcome period is ongoing. Therefore an
investor that purchases Shares after an outcome period has begun
may be exposed to enhanced downside risk if the reference asset has
increased in value.
Innovator Defined Outcome ETFs -
Benefits to Advisors
- Pioneer and creator
of Defined Outcome ETFs™ with 76 ETFs and over $5 billion AUM
across family5
- Tax-efficient
exposure6 to five broad equity benchmarks with buffers against loss
(Large-cap U.S. Equity (SPY), Growth (QQQ), Small-Cap U.S. Equity
(IWM), International Developed (EFA), Emerging Markets (EEM)) the
20+ Year U.S. Treasury Market (TLT); the Stacker ETFs, the world’s
first ETFs to offer a “stacked” exposure to two or three benchmark
equity index ETFs on the upside, to a cap, with downside exposure
to the SPY only; and the Accelerated ETFs™, the world’s first ETFs
to seek to offer a multiple of the upside return of a reference
asset, up to a cap, with approximately single exposure on the
downside.
- Reset annually or
quarterly and can be held indefinitely as core holdings
- Innovator’s Defined
Outcome ETF™ lineup has amassed 90 outcome period completions with
the ETFs successfully resetting for the coming outcome period7
- Monthly issuance on
SPY with three buffer levels (9,15, or 30%)
Innovator's Defined Outcome ETFs™ are the
subject of a patent application filed with the U.S. Patent and
Trademark Office.
The Funds have characteristics unlike
many other traditional investment products and may not be suitable
for all investors. For more information regarding whether an
investment in the Fund is right for you, please see “Investor
Suitability” in the prospectus.
Investors in the Innovator Buffer ETFs™ and
Accelerated ETFs™ will not receive dividend yield from their
holdings; the ETFs will be based on the price returns of the
reference ETF (e.g., EFA, EEM, SPY or QQQ) over the length of the
outcome period. The Defined Outcome ETFs™ are constructed using
Cboe FLEX Options, offering exposure to markets rather than
investing in them directly.
At the end of each Defined Outcome ETF™’s
outcome period, the ETF will simply rebalance and reset, providing
investors with new upside caps and a fresh buffer for those funds
with a buffer strategy, over the next outcome period. The Defined
Outcome ETFs™ do not expire and can be long-term core equity
holdings in a portfolio. The options-based ETFs are anticipated to
be as tax-efficient as traditional equity ETFs, with no planned cap
gains distributions to shareholders and investors being able to
defer taxes until selling.
The Accelerated ETFs™ provide defined returns
over the entire Outcome Period, not on a daily basis. As a result,
interim returns may lag the reference benchmark ETFs. This is due
to the time-value nature of the underlying options held by the
fund; as such, the Accelerated ETFs™ won’t maintain proportional
betas of 1.0 to the reference ETF in instances of positive returns
for the associated equity benchmark. Though they provide
simultaneous multiple exposure to the upside of the benchmark, the
Accelerated ETFs™ only seek to provide the positive performance of
the reference ETF over the full Outcome Period, up to a cap, and
1:1 downside to the reference asset over the Outcome Period. In the
interim, or intra-Outcome Period, investors can expect the
Accelerated ETFs™ to exhibit lower beta than traditional passive
index-tracking ETFs. An investor that purchases Shares after an
Outcome Period has begun may be exposed to downside from that point
forward if the reference asset has appreciated in value since the
period began.
About Innovator Defined Outcome
ETFs™ Defined Outcome ETFs™ are the world’s first ETFs
that seek to provide investors with known ranges of future
investment outcomes prior to investing. These outcome ranges
include multiple and single upside exposure, to a cap, with defined
levels of downside risk with buffers and floors over a set amount
of time. The Innovator Defined Outcome ETFs™ cover a large spectrum
of domestic and international equities and bonds. Innovator’s
category-creating Defined Outcome ETF™ family includes Buffer
ETFs™, Stacker ETFs™ and Floor ETFs™.
The Buffer ETFs™ seek to provide the upside
performance of broadly recognized benchmarks (e.g., SPY, QQQ, IWM,
EFA, and EEM, as well as TLT) to a cap, with built-in buffers, over
an outcome period of one year. The ETFs reset annually and can be
held indefinitely.
Each Buffer ETF™ in Innovator’s Defined Outcome
ETF™ suite seeks to provide a defined exposure to a broad market
benchmark where the downside buffer level, upside growth potential
to a cap, and Outcome Period are all known, prior to investing. In
2019, Innovator began expanding its suite of U.S. Equity Buffer
ETFs™ into a monthly series to provide investors more opportunities
to purchase shares as close to the beginning of their respective
Outcome Periods as possible.
Investors can purchase shares of a previously
listed Defined Outcome ETF™ throughout the entire Outcome Period,
obtaining a current set of defined outcome parameters, which are
disclosed daily through a web tool available at:
http://innovatoretfs.com/define.
Innovator is focused on delivering defined
outcome-based solutions inside the benefit-rich ETF wrapper,
retaining many of the features that have contributed to the success
of structured products8 (e.g., downside buffer levels, upside
participation, defined outcome parameters), but with the added
benefits of transparency, liquidity, the elimination of credit
risk9 and lower costs afforded by the ETF structure.
About Innovator Capital Management,
LLCAwarded ETF.com's "ETF Issuer of the Year - 2019"*,
Innovator Capital Management LLC (Innovator) is an SEC-registered
investment advisor (RIA) based in Wheaton, IL. Formed in 2014,
the firm is currently headed by ETF visionaries Bruce Bond and John
Southard, founders of one of the largest ETF providers in the
world. Bond and Southard reentered the asset management industry to
bring to market first-of-their-kind investment opportunities,
including the Defined Outcome ETFs™, products that they felt
would change the investing landscape and bring more certainty
to the financial planning process. Innovator’s category-creating
Defined Outcome ETF™ family includes Buffer ETFs™, Floor ETFs,
Stacker ETFs™ and the Accelerated ETFs™. Buffer ETFs™ and Floor
ETFs™ seek to provide investors structured exposures to broad
markets, where the upside growth potential, buffer or floor against
the downside, and outcome period are all known, prior to investing.
Accelerated ETFs™ are the world’s first ETFs to seek to offer a
multiple of the upside return of a reference asset, up to a cap,
with approximately single exposure on the downside over an outcome
period. Having launched the first Defined Outcome ETFs™ in 2018 --
the flagship Innovator U.S. Equity Buffer ETF™ Suite – Innovator’s
solutions allow advisors to construct diversified portfolios with
known outcome ranges to aid in risk management and financial
planning. Built on a foundation of innovation and driven by a
commitment to help investors better control their financial
outcomes, Innovator is leading the Defined Outcome ETF
Revolution™. For additional information, visit
www.innovatoretfs.com.
About Cboe Global Markets,
Inc.Cboe Global Markets (Cboe: CBOE) is one of the world’s
largest exchange-holding companies, offering cutting-edge trading
and investment solutions to investors around the world. For more
information, visit www.cboe.com.
About Milliman Financial Risk Management
LLCMilliman Financial Risk Management LLC (Milliman FRM)
is a global leader in financial risk management to the retirement
industry, providing investment advisory, hedging, and consulting
services on approximately $150 billion in global assets as of March
31, 2021. Milliman FRM is one of the largest and fastest-growing
subadvisors of ETFs. For more information about Milliman FRM, visit
www.Milliman.com/FRM.
Media ContactPaul Damon+1 (802)
999-5526paul@keramas.net
Interim Period Shareholders
Unlike structured notes, which offer limited
liquidity, Innovator Defined Outcome ETFs™ trade throughout the day
on an exchange, like a stock. As a result, investors purchasing
shares of a Fund after its launch date may achieve a different
payoff profile than those who entered the Fund on day one.
Innovator recognizes this as a benefit of the Funds and provides a
web-based tool that allows investors to know, in real-time
throughout the trading day, their potential defined outcome return
profile before they invest, based on the current ETF price and the
Outcome Period remaining. Innovator’s web tool can be accessed at
http://www.innovatoretfs.com/define.
Although each Fund seeks to achieve the
defined outcomes stated in its investment objective, there is no
guarantee that it will do so. The returns that the Funds seek to
provide do not include the costs associated with purchasing shares
of the Fund and certain expenses incurred by the Fund.
Investing involves risks. Loss of
principal is possible. The Funds face numerous market
trading risks, including active markets risk, authorized
participation concentration risk, buffered loss risk, cap change
risk, capped upside return risk, correlation risk, liquidity risk,
management risk, market maker risk, market risk,
non-diversification risk, operation risk, options risk, trading
issues risk, upside participation risk and valuation risk. For a
detail list of fund risks see the prospectus.
Market Disruptions Resulting from
COVID-19. The outbreak of COVID-19 has negatively affected
the worldwide economy, individual countries, individual companies
and the market in general. The future impact of COVID-19 is
currently unknown, and it may exacerbate other risks that apply to
the Fund.
Foreign and Emerging Markets
Risk Non-U.S. securities and Emerging Markets are subject
to higher volatility than securities of domestic issuers due to
possible adverse political, social or economic developments,
restrictions on foreign investment or exchange of securities, lack
of liquidity, currency exchange rates, excessive taxation,
government seizure of assets, different legal or accounting
standards, and less government supervision and regulation of
securities exchanges in foreign countries.
Technology Sector Risk
Companies in the technology sector are often smaller and can be
characterized by relatively higher volatility in price performance
when compared to other economic sectors. They can face intense
competition, which may have an adverse effect on profit
margins.
Small-Cap Risk Small-cap
companies may be more volatile and susceptible to adverse
developments than their mid- and large-cap counterpart. In
addition, the small-cap companies may be less liquid than larger
companies.
FLEX Options Risk The Fund will
utilize FLEX Options issued and guaranteed for settlement by the
Options Clearing Corporation (OCC). In the unlikely event that the
OCC becomes insolvent or is otherwise unable to meet its settlement
obligations, the Fund could suffer significant losses.
Additionally, FLEX Options may be less liquid than standard
options. In a less liquid market for the FLEX Options, the Fund may
have difficulty closing out certain FLEX Options positions at
desired times and prices. The values of FLEX Options do not
increase or decrease at the same rate as the reference asset and
may vary due to factors other than the price of reference
asset.
These Funds are designed to provide
point-to-point exposure to the price return of the Reference Asset
via a basket of Flex Options. As a result, the ETFs are not
expected to move directly in line with the Reference Asset during
the interim period.
Investors purchasing shares after an outcome
period has begun may experience very different results than funds'
investment objective. Initial outcome periods are approximately
1-year beginning on the funds' inception date. Following the
initial outcome period, each subsequent outcome period will begin
on the first day of the month the fund was incepted. After the
conclusion of an outcome period, another will begin.
Fund shareholders are subject to an
upside return cap (the "Cap") that represents the maximum
percentage return an investor can achieve from an investment in the
funds' for the Outcome Period, before fees and expenses. If the
Outcome Period has begun and the Fund has increased in value to a
level near to the Cap, an investor purchasing at that price has
little or no ability to achieve gains but remains vulnerable to
downside risks. Additionally, the Cap may rise or fall from one
Outcome Period to the next. The Cap, and the Fund's position
relative to it, should be considered before investing in the Fund.
The Funds' website, www.innovatoretfs.com, provides important Fund
information as well information relating to the potential outcomes
of an investment in a Fund on a daily basis.
The Funds with buffer mechanisms only
seek to provide shareholders that hold shares for the entire
Outcome Period with their respective buffer level against Reference
Asset losses during the Outcome Period. You will bear all Reference
Asset losses exceeding 9, 15 or 30%. Depending upon market
conditions at the time of purchase, a shareholder that purchases
shares after the Outcome Period has begun may also lose their
entire investment. For instance, if the Outcome Period has begun
and the Fund has decreased in value beyond the pre-determined
buffer, an investor purchasing shares at that price may not benefit
from the buffer. Similarly, if the Outcome Period has begun and the
Fund has increased in value, an investor purchasing shares at that
price may not benefit from the buffer until the Fund's value has
decreased to its value at the commencement of the Outcome
Period.
THE CORPORATIONS MAKE NO WARRANTIES AND
BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).
Cboe Global Markets, Inc., and its
affiliates do not recommend or make any representation as to
possible Benefits from any securities, futures or investments, or
third-party products or services. Cboe Global Markets, Inc., is not
affiliated with S&P DJI, Milliman, or Innovator Capital
Management. Investors should undertake their own due diligence
regarding their securities, futures and investment
practices.
Cboe Global Markets, Inc., and its
affiliates make no warranty, expressed or implied, including,
without limitation, any warranties as of merchantability, fitness
for a particular purpose, accuracy, completeness or timeliness, or
as to the results to be obtained by recipients of the
products.
* ETF.com’s editorial team
chose the finalists and then the ETF.com Awards Selection
Committee, an independent panel comprised of fifteen of the ETF
industry’s leading analysts, consultants and investors, decided the
winners.
Innovator ETFs™, Defined Outcome ETF™, Buffer
ETF™, Accelerated ETF™, Stacker ETF™, Enhanced ETF™, Define Your
Future™, Leading the Defined Outcome ETF Revolution™ and other
service marks and trademarks related to these marks are the
exclusive property of Innovator Capital Management, LLC.
The Funds' investment objectives, risks, charges
and expenses should be considered before investing. The prospectus
contains this and other important information, and it may be
obtained at innovatoretfs.com. Read it carefully before
investing.
Innovator ETFs are distributed by Foreside Fund
Services, LLC.
Copyright © 2021 Innovator Capital Management,
LLC.
800.208.5212
1 SPY is the SPDR S&P 500 ETF Trust.2 QQQ is
the ticker for the Invesco QQQ ETF, also known as the Invesco QQQ
Trust Series 1.3 EFA is the ticker for the iShares MSCI EAFA ETF.4
EEM is the ticker for the iShares MSCI Emerging Markets ETF.5 AUM
in all Innovator Defined Outcome ETFs as of 9.30.2021.6 ETFs use
creation units, which allow for the purchase and sale of assets in
the fund collectively. Consequently, ETFs usually generate fewer
capital gain distributions overall, which can make them somewhat
more tax-efficient than mutual funds. 7 As of 10.01.20218
Structured notes and structured annuities are financial instruments
designed and created to afford investors exposure to an underlying
asset through a derivative contract. It is important to note that
these ETFs are not structured notes or structured annuities.9
Defined Outcome ETFs are not backed by the faith and credit of an
Issuing institution, so they are not exposed to credit risk.
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