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Innovator announces new caps and return profiles for Defined Outcome ETFs


Innovator Capital Management has announced the new upside caps and return profiles for the January series of its Defined Outcome ETFs, including the latest Stacker ETFs, which have listed on the Cboe. The return profiles for the ten ETFs in the January series will span the calendar year to 31 December 2021, aligning with many advisors’ annual rebalancing and portfolio management activities.

The January series includes the Power Buffer ETFs on the Nasdaq-100 QQQ ETF (NJAN), the Russell 2000 IWM ETF (KJAN), MSCI EAFE EFA ETF (IJAN) and MSCI Emerging Markets EEM ETF (EJAN), which completed their first annual outcome period and reset at the end of the month, as well as the S&P 500 Buffer ETFs – Innovator S&P 500 Buffer ETF – January (BJAN), Innovator S&P 500 Power Buffer ETF – December (PJAN) and Innovator S&P 500 Ultra Buffer ETF – December (UJAN) – which finished their second annual outcome period.

Additionally, Innovator is listing the second quarterly series of its Stacker ETFs, the world’s first ETFs that seek to offer “stacked” exposure to two or three equity markets (via the price returns of SPY, QQQ, and IWM) to a cap, and downside exposure to the SPY only, over a one year outcome period. The January Stacker ETFs include the Innovator Triple Stacker ETF – January (TSJA), Innovator Double Stacker ETF – January (DSJA) and Innovator Double Stacker 9 Buffer ETF – January (DBJA).

“While we’re very excited to put 2020 behind us, with many stock and credit benchmarks near record highs, 2021 presents a challenging market environment for investment portfolios,” says Bruce Bond, CEO of Innovator ETFs. “According to Barron’s December 18th cover story, most Wall Street strategists see low to modest potential gains for major stock benchmarks over the calendar year. At the same time, the consensus of forecasters thinks rates will rise, which could lead to losses in bond portfolios. In a low-to-modest-return environment, advisors can potentially enhance equity returns with Innovator’s Stacker ETFs. 

“For advisors who are wary of today’s high stock market levels and valuations as the global economy continues to battle the pandemic, as well as the potential for price losses on bonds if rates rise, the Buffer ETFs can help clients stay invested in the market with built-in buffers against a known amount of loss. Whether an advisor has a bearish or bullish market view for 2021, or whether an investor has a low or high risk tolerance, Innovator has a Defined Outcome ETF to help them implement their view and better match their risk appetite.”

The ETFs reset annually and can be held indefinitely. For additional information, visit the Innovator Defined Outcome ETF Pricing Tool.

Starting with the January series, Innovator will be transitioning reference assets of the underlying options within its Defined Outcome Buffer ETFs to achieve the stated outcomes with ETF-based, or fund-based, options rather than index-based options. Innovator’s Equity Buffer ETFs have traditionally used index-based options while the Defined Outcome Bond ETFs and Stacker ETFs have been constructed using fund-based options. This change is intended to streamline market making and increase the operational efficiencies of the tax-efficient Buffer ETFs and will not materially impact shareholders. The Buffer ETFs will continue to draw from the same deeply liquid options markets pools that underpin the strategies, the level of the upside caps achieved should be unaffected and no tax event will be triggered given the options can be transferred in-kind. 

“These operational changes are intended to harness the power and efficiencies of the ETF wrapper even further for the benefit of our Defined Outcome Buffer ETF investors,” adds Bond.

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