“IOCT” – Innovator International Developed Power Buffer ETF™ – October: seeks to offer upside exposure to foreign developed markets stocks, via EFA, up to a cap, with a buffer against the first 15% of loss in EFA over annual outcome period
“EOCT” – Innovator Emerging Markets Power Buffer ETF™ – October: seeks to offer upside exposure to emerging markets stocks, via EEM, up to a cap, with a buffer against the first 15% of loss in EEM over annual outcome period
XDOC, XBOC, XTOC, QTOC: New Accelerated ETFs™
Accelerated ETFs™ seek to offer a multiple (2x or 3x) of the upside of SPY or QQQ, to a cap, with approximately single exposure to the downside, with or without a buffer, over a one-year outcome period
Tools for potential wealth accumulation, Accelerated ETFs™ seek to enhance investors’ equity performance potential to a cap without taking on additional downside risk
CHICAGO, Oct. 01, 2021 (GLOBE NEWSWIRE) — 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 EOCT
Today, 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 Developed|
Power Buffer ETF™ – October
10/01/21 – 9/30/22
|EOCT||Innovator Emerging Markets|
Power Buffer ETF™ – October
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, QTOC
Innovator 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|
|XBOC||SPY||2X||1X, 9% Buffer||10.98%||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, LLC
Awarded 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 LLC
Milliman 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.
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