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Innovator launches breakout methodology ETF


Innovator Capital Management has launched the Innovator IBD Breakout Opportunities ETF (BOUT) on the NYSE Arca. The firm writes that BOUT provides investors with exposure to Investor’s Business Daily’s signature breakout methodology of investing, with roots dating back to William O’Neil’s research in the 1950s.
The Innovator IBD Breakout Opportunities ETF (BOUT) seeks to track the performance of the IBD Breakout Stocks Index. The IBD Breakout Stocks Index is a rules-based index developed by Investor’s Business Daily that is designed to provide investment exposure to stocks poised to ‘breakout’, or experience a period of sustained price growth beyond the security’s recent ‘resistance level’.
The Index methodology utilises a ranking score based upon the security’s IBD Composite Ranking and Relative Price Strength Rating to assign weights, and stocks with higher rankings receiving larger weights. The Index includes a minimum of 25 stocks, and is rebalanced and reconstituted on a weekly basis.
“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,” says Chris Gessel, Chief Content Officer of IBD. “The IBD Breakout Stocks Index begins by identifying with 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.”
“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,” says Bruce Bond, Chief Executive Officer of Innovator Capital Management. “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. We are excited to build on our relationship with Investor’s Business Daily expanding the IBD suite with a third ETF based upon their widely followed investment research.”

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