Chicago, IL, Aug. 10, 2020 (GLOBE NEWSWIRE) -- Innovator Capital Management, LLC (Innovator) today announced the launch of the Innovator Laddered Fund of S&P 500 Power Buffer ETFs (BUFF) will take place tomorrow, Tuesday, August 11. BUFF will invest equally in each of Innovator’s 12 monthly S&P 500 Power Buffer ETFs™ and rebalance semi-annually. The underlying S&P 500 Power Buffer ETFs™ each seek to provide a buffer against the first 15% of losses in the S&P 500 and upside performance to a cap over a one-year outcome period; they are part of Innovator’s category-creating Defined Outcome ETF™ family.
As announced in May, to launch BUFF, Innovator will make changes to its existing Innovator Lunt Low Vol/High Beta Tactical ETF (LVHB), including a change to the fund’s name, ticker symbol, underlying index, investment objective, management fee and strategy at that time.
BUFF will seek to offer investors a managed portfolio (an ETF of ETFs) that will invest equally across all twelve monthly S&P 500 Power Buffer ETFs™ – providing a ladder of buffered S&P 500 exposures. The twelve underlying buffered S&P 500 exposures each have a different upside cap level and period of time until their annual reset, but share a 15% buffer against losses in the S&P 500 Index over their outcome period. Innovator’s intention with BUFF is to offer an ETF that can provide investors a managed approach to buffered equity investing that maintains upside growth potential by continuously participating in new upside caps as the underlying ETFs reset monthly – and which can be allocated to at any point during the year.
Bruce Bond, CEO of Innovator ETFs, said, “The Innovator Laddered Fund of S&P 500 Power Buffer ETFs (BUFF) will streamline the process of investing in our revolutionary Defined Outcome ETFs™. With BUFF, we believe investors can take advantage of the foundation we’ve laid as the leaders and pioneers in Defined Outcome ETFs™ and the infrastructure that we’ve built in issuing monthly series of the S&P 500 Power Buffer ETFs™. By bringing BUFF to market, Innovator is realizing our long-term vision of providing a full and diversified suite of Defined Outcome ETFs™ for advisors and is consistent with offering investors effective, transparent and scalable risk management tools they can understand in an ETF.”
BUFF will be rebalanced semi-annually, charge 20 basis points1 and seeks to provide investors with a simplified, efficient solution to buffered equity investing. It is anticipated the ETF will provide investors with lower volatility (standard deviation)2, beta3 and drawdowns relative to the S&P 500 while capturing a measure of the capital appreciation potential of U.S. domestic large-cap stocks, the largest equity market globally by capitalization and typically the most significant allocation in most diversified portfolios.
Bond continued, “The retiring of the Baby Boomers marks the biggest demographic challenge today’s advisors are working through; fiduciaries know better than anyone that the estimated 10,000 Baby Boomers retiring each day don’t want to make their money twice. When losing less matters more, reducing risk is crucial to overcoming investors’ worst behavioral tendencies, like selling at the wrong time because portfolios were mismatched with investors’ risk tolerance levels. This year’s historically volatile market conditions and the vastly differing forecasts for the economic and market climate ahead demonstrate the value of buffering portfolios against an uncertain future while maintaining exposure to the potential growth of equities.”
“With BUFF, investors will be able to achieve constant diversified buffered exposure to the S&P 500 Index, locking in new caps as each monthly series resets while decreasing market losses and smoothing out the overall ride in equities. As a risk-managed growth engine, we see many applications for BUFF, including within retirement portfolios, target-date funds and model portfolios where BUFF can easily be plugged into an allocation framework to replace a portion of equities, bonds and/or alternatives,” concluded Bond.
As an ETF of ETFs, BUFF is designed to be bought and/or sold without regard for the outcome period associated with the underlying individual ETFs. The strategy, as measured by its index – the Refinitiv Laddered Power Buffer Strategy Index – seeks to provide lower volatility (standard deviation), beta and drawdowns relative to the S&P 500. While BUFF will invest in Innovator Defined Outcome Buffer ETFs™ – in an equal weighted portfolio of all twelve monthly issues of the S&P 500 Power Buffer ETFs™, which have a 15% buffer against loss in the S&P 500 – the fund will not be a Defined Outcome product with an upside cap and downside buffer, nor an outcome period.
BUFF will seek investment results that correspond generally (before fees and expenses) to the price and yield of the Refinitiv Innovator Laddered Power Buffer Strategy Index. BUFF will generally invest at least 80% of its net assets (including investment borrowings) in securities comprising this Index. The Index has been developed by and is maintained and sponsored by Refinitiv/Thomson Reuters. The Index is comprised of the shares of the following twelve underlying Innovator S&P 500 Power Buffer ETFs™:
- Innovator S&P 500 Power Buffer ETF™ – January (PJAN)
- Innovator S&P 500 Power Buffer ETF™ – February (PFEB)
- Innovator S&P 500 Power Buffer ETF™ – March (PMAR)
- Innovator S&P 500 Power Buffer ETF™ – April (PAPR)
- Innovator S&P 500 Power Buffer ETF™ – May (PMAY)
- Innovator S&P 500 Power Buffer ETF™ – June (PJUN)
- Innovator S&P 500 Power Buffer ETF™ – July (PJUL)
- Innovator S&P 500 Power Buffer ETF™ – August (PAUG)
- Innovator S&P 500 Power Buffer ETF™ – September (PSEP)
- Innovator S&P 500 Power Buffer ETF™ – October (POCT)
- Innovator S&P 500 Power Buffer ETF™ – November (PNOV)
- Innovator S&P 500 Power Buffer ETF™ – December (PDEC)
BUFF’s investment performance, tracking its Index, will largely depend on the investment performance of the underlying ETFs in which the Fund invests, subject to the respective caps and buffers of the underlying ETFs. There is no guarantee the underlying funds will achieve their investment objectives.
In May 2020, the Board of Trustees of the Innovator ETFs Trust II approved a reduction in the annual unitary management fee paid by shareholders to Innovator Capital Management, LLC the Fund’s investment adviser, from 0.49% of the Fund’s average daily net assets to 0.20% of the Fund’s average daily net assets. In addition to the Fund’s own fees and expenses, the Fund will pay indirectly a proportional share of the fees and expenses of the underlying ETFs in which it invests, included advisory and administration fees4.
Once effective, LVHB will trade its shares under the new ticker symbol “BUFF”.
In addition to being named “ETF Issuer of the Year – 2019” in the seventh annual ETF.com Awards*, acknowledging the rapid advisor adoption and the positive potential impact on investor behavior of the Defined Outcome ETFs™, Innovator won “Newcomer Alternative ETF of the Year” and was “Highly Commended” for “ETF Suite of the Year” at the Mutual Fund Industry and ETF Awards 2020 by Fund Intelligence** in July.
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Innovator Defined Outcome Buffer ETFs - Benefits to Advisors
- Pioneer and creator of Defined Outcome ETFs™ with 48 ETFs, over $3 billion in AUM across family and over $1.2 billion in inflows YTD5
- Tax-efficient exposure to five broad benchmark indexes (S&P 500, NASDAQ 100, Russell 2000, MSCI EAFE, MSCI EM)
- Monthly issuance on the S&P 500 with three buffer levels (9,15, or 30%)
- Only sponsor with a track record of completed Outcome Periods6
Innovator's Defined Outcome ETFs™ are the subject of a patent application filed with the U.S. Patent and Trademark Office.
About Innovator Defined Outcome Buffer ETFs ™
Defined Outcome Buffer ETFs™ are the world’s first ETFs that seek to provide investors the upside performance of broadly recognized indexes (e.g., S&P 500, Nasdaq 100, Russell 2000, MSCI EAFE, and MSCI Emerging Markets) 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 index 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 S&P 500 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 products7 (e.g., downside buffer levels, upside participation, defined outcome parameters), but with the added benefits of transparency, liquidity, the elimination of credit risk and lower costs afforded by the ETF structure.
About Innovator Capital Management, LLC
Innovator Capital Management, LLC 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. Innovation is our hallmark and acts as a guide to our company principles. Innovator is committed to helping investors better control their financial outcomes by providing investment opportunities they never considered or thought possible. For additional information, visit www.innovatoretfs.com.
About Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: 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.
Investing involves risks, and loss of principal is possible. The Fund may 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.
The Fund, in accordance with the Refinitiv Laddered Power Buffer Strategy Index, will be continuously invested in a laddered portfolio of the twelve Underlying ETFs. The index is rebalanced semi-annually such that each Underlying ETF will constitute 1/12 of the Index portfolio before fees and expenses. Each Underlying ETF seeks to match the performance of S&P 500 Price Index up to a specified cap, while buffering against a 15% loss over the course of an approximately one-year time period that begins on the first trading day of the month indicated in the Underlying ETF’s name when the fund enters into its FLEX Option positions and ends on the market’s closure on the last trading day of the month immediately preceding the month indicated its name when those FLEX Options expire. There is no guarantee that the defined outcome strategy of an Underlying ETF in any given Outcome Period will be achieved.
Fund-of-Funds Risk. As the Fund invests in Underlying ETFs, the Fund also has exposure to additional risks as well, which includes numerous market trading risks, active market risk, authorized participant concentration risk, buffered loss risk, cap change risk, cap 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 detailed list of risks to the Fund, see the prospectus. As each Underlying ETF may be invested in FLexible EXchange® Options (“FLEX Options”) that reference the S&P 500 Price Index, 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 Fund is a “fund-of-funds” and does not itself pursue a defined outcome strategy, nor does it seek to provide a buffer against S&P 500 Price Index losses. Depending upon prevailing market conditions, an investor purchasing Shares of the Fund may experience investment returns that underperform the investment returns provided by the Underlying ETFs themselves because one or more Underlying ETFs may have exhausted the buffer that it seeks to provide or have little upside available due to the index return being close to or exceeding to its Cap. Additionally, as a shareholder in other ETFs, the Fund bears its proportionate share of each ETF’s expenses, subjecting Fund shareholders to duplicative expenses.
The Index seeks to provide laddered investing in the Underlying ETFs. Laddered investing refers to investments in several similar securities that have different maturities or reset dates, with the goal of mitigating timing risks associated with investing in a single investment. The laddered approach of the Index is designed to help an investor offset some of the timing risks inherent in the purchase of shares of a single Underlying ETF.
Innovator Capital Management, LLC maintains a webpage for the Fund and each Underlying ETF that provides current information relating to the Underlying ETF’s sought-after outcomes. Prospective investors are encouraged to visit one or more of these webpages and read the prospectus and statement of additional information of the Underlying ETFs before investing in an either an Underlying ETF or the Fund.
The Fund’s 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 www.innovatoretfs.com. Read it carefully before investing.
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.
** The shortlists and winners are comprised of individuals and firms who have submitted entries or been nominated via the online submission process, as well as through recommendations from leading market participants. Judges will judge the ETF categories and will use the submitted application material, as well as any uploaded supplemental information, to determine which firm, individual or product they believe to be the most suitable and deserving winners for each category.
Innovator ETFsTM, Defined Outcome ETFTM, Buffer ETFTM, Enhanced ETFTM, Define Your FutureTM, Leading the Defined Outcome ETF RevolutionTM and other service marks and trademarks related to these marks are the exclusive property of Innovator Capital Management, LLC.
Innovator ETFs are distributed by Foreside Fund Services, LLC.
Copyright © 2020 Innovator Capital Management, LLC.
800.208.5212
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1 BUFF will charge 0.20% of invested assets after assumed expenses of the underlying funds, which all currently have a management fee of 0.79% of invested assets.
2 Volatility is a statistical measure of the dispersion of returns for a given security or market index.
3 Beta is a measure of the volatility of an individual stock in comparison to the unsystematic risk of the entire market.
4 Innovator’s monthly S&P 500 Power Buffer ETFs™ each have a management fee of .79%.
5 AUM in all Innovator Defined Outcome ETFs™ as of 8.07.2020.
6 Innovator Capital Management, LLC is the only issuer that offer Defined Outcome ETFs™ which have completed a one-year Outcome Period, with seven S&P 500 monthly series resets to date and one for the MSCI EAFE Power Buffer ETF™ and MSCI Emerging Markets Power Buffer ETF™ suites.
7 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.
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