Innovator ETFs | Most Innovative ETF Issuer
Bruce Bond, Co-founder and CEO of Innovator ETFs, tells us why he thinks they won this award.
Why do you think you won this award?
It’s a particular honour for us to be named ‘Most Innovative ETF Issuer,’ as innovation is in our DNA and brand name. We have long taken an approach of identifying investor needs and delivering solutions in a more accessible and tax-efficient way.
We are proud to have pioneered Defined Outcome ETFs, filing for the industry’s first in 2017. The concept of seeking to provide defined exposures to broad markets had historically been confined to the multi-trillion-dollar annuity and structured products markets – but by using an ETF wrapper, we have been able to bring this approach to a wider range of investors, at a lower cost, with greater tax efficiency, and without the credit risk.
To this day, we maintain the largest family of these funds and continue to introduce innovative products and strategies. For example, in July 2023 we launched our Equity Defined Protection ETF (TJUL), a first-of-its-kind fund that seeks to provide upside exposure to large-cap US equities, to a cap, with a 100 per cent buffer against loss.
What is the size and scale of your business at the moment?
Innovator ETFs has grown into a category leader, with the first and largest lineup of Defined Outcome ETFs. We now have 109 ETFs and USD15 billion in AUM.
What trends have you seen over the past year?
The year began with plenty of economic uncertainty, and despite the summer rally in equities, investors remain skittish. With interest rates still elevated, many are playing it safe with an overweight to cash. But savvy advisers and their clients understand that sitting on the sidelines typically means missing out on upside. That’s why we’re seeing so much appetite for our Defined Outcome ETFs; for investors who can’t stomach volatility, these strategies offer an opportunity to stay in equities while managing downside risk.
One example worth highlighting is the Innovator Defined Wealth Shield ETF (BALT). With the SPDR S&P 500 ETF Trust down slightly since July 1st, BALT offers a high buffer (15-20 per cent), allowing investors to stay in equities with one of the most defensive Buffer ETF strategies available. The fund shined in 2022, ending the year up 2.54 per cent while SPY finished at -19.45 per cent. As of early October 2023, it has USD450 million in AUM.
Where do you see the ETF industry going in terms of products over the coming year?
This is a time when many advisers and investors are rethinking risk management, which we see as a key driver for the ETF industry. Bonds have long been the go-to fixed income allocation, but they leave investors exposed to interest rate, inflation, and credit risks.
Barrier and Buffer Income ETFs, on the other hand, provide known levels of downside protection and upside return potential, without the accompanying interest-rate or credit risk. We will continue to see these products hit the market – with a variety of upside profiles and protection levels – helping investors achieve risk management while diversifying their income allocations.
While Innovator ushered in and continues to drive new product development in this space, larger issuers are starting to follow in our footsteps, which we see as validation of the ideas we brought to market.
We look forward to staying at the forefront of innovation as markets and investor needs evolve.
