Innovator to Complete International Equity Power Buffer ETF™ Suite and Expand Accelerated ETFs™ ...
“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™listing October 1st
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
Potential tools for wealth accumulation, Accelerated ETFs™seek toenhance investors’ equity performance potential to a cap without taking on additional downside risk
CHICAGO, Sept. 24, 2021 (GLOBE NEWSWIRE) -- Innovator Capital Management, LLC (Innovator), the pioneer and provider of the largest lineup of Defined Outcome ETFs™, today announced the planned 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
On October 1st, Innovator plans to list 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.
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.
“We believe the International Equity Power Buffer ETFs™ can be powerful risk management tools for advisors seeking to allocate client capital to foreign stocks, 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 equities,” said Bruce Bond, CEO of Innovator ETFs. “With many strategists forecasting higher relative returns from non-U.S. equities over the coming years, many advisors are interested in how they can potentially provide clients with more exposure to foreign stocks but seek to buffer against potential loss and volatility along the way.”
Anticipated cap levels for the new Innovator International Equity Power Buffer ETFs™ – October series, as of 9/22/21
|Ticker||Name||Buffer Level||Cap Range*||Outcome Period|
|IOCT|| Innovator International Developed |
Power Buffer ETF™ - October
|15.00%||6.18 – 8.08%|| 12 months |
10/01/21 – 9/30/22
|EOCT|| Innovator Emerging Markets |
Power Buffer ETF™ - October
|15.00%||10.61 – 13.52%|| 12 months |
10/01/21 – 9/30/22
* The Cap Ranges above are based on the highest and lowest Cap as illustrated by the Funds’ strategy from 8/24/21-9/22/21 and are shown gross of each fund’s management fee (.85% for IOCT; .89% for EOCT). The actual Cap for each Fund will be set at the beginning of the Outcome Period, and is dependent upon market conditions at that time. Periods of high market volatility could result in higher caps, and lower volatility could result in lower caps. As a result, the Cap set by each Fund may be higher or lower than the Cap Range. “Cap” refers to themaximum 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. IOCT and EOCT are not yet available for investment.
New Accelerated ETFs Seek to Enhance Equity Returns: XDOC, XBOC, XTOC, QTOC
Innovator also plans to launch four new Accelerated ETFs™ on the Cboe, representing 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.
On October 1st, Innovator plans to list 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) will seek 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) will seek 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) will seek 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.
Also on October 1st, Innovator plans to list the following Accelerated ETF™ based on Growth stocks through options on QQQ (the Invesco QQQ Trust):
- Innovator Growth-100 Accelerated Plus ETF™ – October (QTOC) will seek 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 digest Wall Street 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, we’re seeing a lot of advisor interest in the Accelerated ETFs™. While there can be no guarantees what future returns might be, if you are an advisor who believes future equity market returns may be positive but relatively lower compared to recent years, we believe the Accelerated ETFs™ are worth considering investments in. 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 a very compelling concept that we are seeing more advisors attracted to for a number of reasons.”
The October series of the Innovator Accelerated ETFs™ will be as follows in the table below:
|Ticker||Reference Asset||Upside to Cap||Downside||Average Cap**||Outcome Period||Listing|
|XBOC||SPY||2X||1X, 9% Buffer||10.22%||Annual||10/1/21|
**The Average Cap listed above represents an average of estimated caps, as illustrated by the fund’s strategy, based upon 10 previous trading days, from 9/09/2021 to 9/22/2021,and are shown gross of the 0.79% management fee. It does not represent the actual cap that will be setat the beginning of the Outcome Period, which will be dependent upon market conditions at that time. Periods of high market volatility could result in higher caps, and lower volatility could result in lower caps. As a result, the Cap set by each Fund may be higher or lower than the Average Cap displayed above. The Cap Ranges based on the highest and lowest Cap as illustrated by the Funds’ strategy from 8/24/21-9/22/21 (gross of the 0.79% management fee) are as follows: 15.62% to 17.30% for XDOC; 9.14% to 10.95% for XBOC; 13.99% to 15.57% for XTOC; and 17.34% to 18.95% for QTOC. “Cap” refers to themaximum 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 viawww.innovatoretfs.com. Investors who purchase shares after the start of an outcome period may be exposed to enhanced risk. XDOC, XBOC, XTOC, and QTOC are not yet available for investment.
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 70 ETFs and over $5 billion AUM across family5
- Tax-efficient exposure 6 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 78 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 risk 9 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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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.
IOCT, EOCT, XDOC, XTOC, XBOC, QTOC: INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS COMMUNICATION SHALL NOT CONSTITUTE AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER SECURITIES LAWS OF ANY SUCH STATE.
AN INDICATION OF INTEREST IN RESPONSE TO THIS ADVERTISEMENT WILL INVOLVE NO OBLIGATION OR COMMITMENT OF ANY KIND.
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.
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 9.22.2021.
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 9.22.2021
8 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.