Innovator Debuts ‘Stacker’ ETFs

October 01, 2020

Today, Innovator upped the ante with regard to its defined outcome lineup, launching three ETFs offering a new twist on the theme. The Innovator Triple Stacker ETF – October (TSOC), the Innovator Double Stacker ETF (DSOC) and the Innovator Double Stacker 9 Buffer ETF (DBOC) all offer upside exposure to multiple indexes but downside exposure to only one.

All three funds come with expense ratios of 0.79% and list on Cboe Global Markets, the parent company of ETF.com.

“Now, for the first time in an ETF, investors who hold shares for an entire outcome period have access to triple or double exposures on the potential upside to a cap with a single exposure on the downside, the S&P 500,” said Innovator CEO Bruce Bond.

“The Stacker ETFs seek to provide advisors with diversified exposure across the U.S. stock markets and can magnify investors’ performance potential without increasing risk beyond exposure to the S&P 500, the benchmark many clients are most comfortable with,” he added.

The Stackers

TSOC invests in flexible exchange (FLEX) options on the SPDR S&P 500 ETF Trust (SPY), the Invesco QQQ Trust (QQQ)and the iShares Russell 2000 ETF (IWM). The fund looks to capture three upside streams of returns, up to a cap, before expenses, of 7.14% for each stream, which adds up to a cumulative upside cap on TSOC of 21.42%. Meanwhile, the fund will only participate in the downside performance of SPY.

Essentially, the funds “stack” the upside performance of the S&P 500 Index, the Nasdaq-100 Index and the Russell 2000 Index via the FLEX options on their ETFs, and only expose investors to the potential losses faced by the S&P 500.

Similarly, DSOC uses FLEX options to capture the performance of QQQ and SPY up to a cap of 11.61% for each, or a cumulative cap of 23.22% before expenses. And once again, the fund only is subject to the downside performance of SPY.

DBOC uses the same strategy as DSOC, but protects against the first 9% of downside performance for SPY, though investors will participate in any further losses on a “one-to-one” basis, according to the prospectus. The upside caps for DSOC’s reference ETFs are 7.41% for a cumulative cap of 14.82%.

All three ETFs reset annually on Oct. 1.  

Innovator’s family of defined outcome ETFs includes more than 50 funds with a total of more than $3.3 billion in assets under management.

Contact Heather Bell at [email protected]

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