Breakout Stock ETF Launches

Latest fund looks to tap in to stock right before they establish momentum.
Reviewed by: Staff
Edited by: Staff

Innovator Capital Management launched an ETF today that hones in on stocks about to break out.

The Innovator IBD Breakout Opportunities ETF (BOUT) is a passive strategy linked to the Investor’s Business Daily Breakout Stocks Index, and owns stocks believed to be “poised to break out,” according to the issuer. The methodology looks at relative price strength and ranks securities, looking to assign heavier weighting to those likely to see sustained price growth.

“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,” Chris Gessel, chief content officer of IBD, said in a release.

At launch, BOUT held 56 stocks—the fund has to hold a minimum of 25 stocks at all times—in a mix that’s rebalanced every week. BOUT, listed on NYSE Arca, has a 0.80% expense ratio, or $80 per $10,000 invested.

“While many ETFs focus on stocks with established momentum, 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,” said Bruce Bond, CEO of Innovator Capital Management.

BOUT is Innovator’s 9th ETF, and is part of the company’s lineup of “traditional” ETFs rather than its defined outcome family of funds. Innovator’s biggest ETF is the Innovator IBD 50 ETF (FFTY), with $534 million in total assets.

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