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Innovator ETFs lists the Stacker ETFs


Innovator Capital Management has listed the Innovator Stacker ETFs which offer a “stacked” or multiple exposure on the upside, to a cap, with a single exposure to the downside. Part of Innovator’s Defined Outcome ETF family, the company says the Stacker ETFs are the world’s first ETFs to offer advisers a potential solution to magnify their equity exposures and performance potential by accessing multiple US stock market return streams simultaneously, up to a cap, while maintaining downside exposure to a single benchmark, SPY (the SPDR S&P 500 Index ETF), over a one year outcome period.

The Stacker ETFs listing today on the Cboe are the Innovator Triple Stacker ETF – October (TSOC), the Innovator Double Stacker ETF – October (DSOC) and the Innovator Double Stacker 9 Buffer ETF – October (DBOC) on the Cboe. The Innovator Triple Stacker ETF – October (TSOC) will seek to provide investors with upside performance comprised of 100 per cent of SPY (S&P 500) + 100 per cent of QQQ1 (Nasdaq 100) + 100 per cent of IWM2 (Russell 2000), to a cap, and the downside exposure to SPY only, over a one-year Outcome Period. The Innovator Double Stacker ETF – October (DSOC) will seek to provide investors with upside performance comprised of 100 per cent of SPY (S&P 500) + 100 per cent of QQQ (Nasdaq 100), to a cap, and the downside exposure to SPY only, over a one-year Outcome Period. The Innovator Double Stacker 9 Buffer ETF – October (DBOC) will seek to provide investors with upside performance comprised of 100 per cent of SPY (S&P 500) + 100 per cent of QQQ (Nasdaq 100), to a cap, and the downside exposure is to SPY only and includes a Buffer against the first 9 per cent of losses in SPY over a one-year Outcome Period.

“Today’s launch of the Stacker ETFs is another landmark for financial advisors and the ETF industry. Now, for the first time in an ETF, investors who hold shares for an entire outcome period have access to triple or double exposures on the potential upside to a cap with a single exposure on the downside, the S&P 500. With the ‘Stackers’, we at Innovator are introducing a suite of products that we feel make a lot of sense for investors’ portfolios, especially in the low-expected-return environment for US stocks that many are forecasting. The Stacker ETFs can help take the guesswork out of some of today’s big challenges advisors face when constructing equity portfolios, like which equity exposure might be the best to own for the next year and which traditional active managers (stock pickers) can potentially outperform the market. The Stacker ETFs seek to provide advisors with diversified exposure across the US stock markets and can magnify investors’ performance potential without increasing risk beyond exposure to the S&P 500, the benchmark many clients are most comfortable with,” says Bruce Bond, CEO of Innovator ETFs.

Innovator also announced the new upside caps and return profiles for the existing October Series of the Defined Outcome ETFs, which reset yesterday at the end of September. This includes the S&P 500 Buffer ETFs – Innovator S&P 500 Buffer ETF – October (BOCT), Innovator S&P 500 Power Buffer ETF – October (POCT) and Innovator S&P 500 Ultra Buffer ETF – October (UOCT) – as well as the Power Buffer ETFs on the Nasdaq 100 (NOCT) and Russell 2000 (KOCT). BOCT, POCT and UOCT completed their second outcome period while NOCT and KOCT finished their first annual outcome period. It was an extraordinarily volatile year that saw domestic equity benchmarks reach record levels before the most rapid bear market drawdown and subsequent rebound in history, with many markets snapping back to hit fresh highs recently. Through the Outcome Period, the October series of the options-based Defined Outcome Buffer ETFs experienced lower drawdown and volatility (standard deviation) than their respective reference assets while participating in the upside of those markets that finished in positive territory.

The Stackers ETFs will not be like traditional leveraged ETFs, which can produce distorted returns and higher volatility when held long-term due to their frequent, often daily, rebalancing. Instead, the Stacker ETFs will seek to provide asymmetrical returns over a year-long outcome period that are magnified on the upside only, to a cap, while rebalancing annually, making them more suited for longer-term investors.

John Southard, CIO of Innovator ETFs, says: “Today’s near-record-low yielding and low forward-looking return environment for US equities is creating a headache for advisors’ seeking to hit their clients’ return goals with traditional portfolio assets, strategies and allocations. The idea with the Innovator Stacker ETFs is to allow investors to participate in the potential upside, to a cap, across multiple US equity market segments without taking on the potential downside risk and additional volatility of Growth and Technology stocks, as well as Small-Caps. And with the ‘Stackers’, advisors don’t have to be right about which US equity market segment to allocate to based on fundamentals or technicals, potential government policies or stimulus measures. Especially in low-return equity markets, we feel the Stacker ETFs hold significant appeal and can offer advisors substitutes for active stock pickers given the transparency, return parameters and outperformance potential.”

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