Innovator ETFs today added to its lineup of defined outcome ETFs with another trio of funds that provide downside protection while limiting the upside investors can realize. The funds reset their buffers and adjust their upside caps on an annual basis.
The funds each charge an expense ratio of 0.79% and list on Cboe Global Markets, the parent company of ETF.com.
The funds are all actively managed but seek to replicate the performance of the S&P 500 Price Index using flexible exchange (FLEX) options on the index. The funds, their tickers and their buffers are as follows:
- The Innovator S&P 500 Buffer ETF - November (BNOV) has a 14.03% upside cap before management fees and protects against losses up to 9%.
- The Innovator S&P 500 Power Buffer ETF - November (PNOV) has an 8.75% upside cap before management fees and protects against losses up to 15%.
- The Innovator S&P 500 Ultra Buffer ETF - November (UNOV) has a 7.83% upside cap while protecting investors against losses beyond 5% and up to 35%.
Innovator started out by launching three buffer ETFs for each quarter, but in 2019 began launching funds covering every month. With these latest launches, the lineup tied to the S&P 500 Price Index includes 24 funds with nearly $2 billion in assets under management. The issuer has also begun launching similar ETFs tied international indexes and other domestic benchmarks.
SEC Approves In-Kind Transfer Rule
Additionally, on Oct. 17, the SEC approved a new Cboe rule that will allow in-kind transfers with regard to options held in ETFs. Innovator had worked with Cboe Global Markets to improve the tax efficiency of options-based ETFs, according to a press release.
In-kind transactions are one of the key benefits of ETFs, allowing investors to defer certain tax consequences until they sell an ETF and helping them to avoid capital gains distributions, among other benefits.
Contact Heather Bell at [email protected]