First Trust Adds To Defined Outcome ETFs

November 18, 2019

Today, First Trust rolled out another two additions to its new lineup of defined outcome ETFs that debuted a little over a week ago. The FT Cboe Vest U.S. Equity Buffer ETF – November (FNOV) and the FT Cboe Vest U.S. Equity Deep Buffer ETF – November (DNOV) both allow investors to participate in the upside of the market up to a cap that is reset annually while receiving protection from declines up to a certain percentage.

Both ETFs come with an expense ratio of 0.85% and list on Cboe Global Markets, the parent company of ETF.com.

 

How They Work

The funds cover an outcome period ranging from Nov. 18, 2019, through Nov. 20, 2020. FNOV will allow investors to receive upside returns up to 12.36% before fees while protecting against declines of up to 10% before fees. Meanwhile, DNOV will allow investors to experience positive returns of up to 8.12% before fees while protecting them from declines of more than 5% and up to 30% before fees.

The actively managed portfolios for both DNOV and FNOV hold baskets of flexible exchange options (FLEX) tied to the SPDR S&P 500 ETF Trust (SPY) with the overall aim of reflecting the performance of SPY within their predetermined limits.

The original First Trust ETFs in the firm’s new family included the FT Cboe Vest U.S. Equity Deep Buffer ETF – August (DAUG) and FT Cboe Vest U.S. Equity Buffer ETF – August (FAUG), and these latest additions bring the total lineup to four. Innovator Capital Management pioneered the space with the launch of its own defined outcome ETFs last year, and its family now has more than $1.5 billion in assets under management and includes nearly 30 funds reflecting the performance of different buffer ranges and different markets.

Contact Heather Bell at [email protected]

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