Innovator Plans More Buffered ETFs

A recent filing from Innovator ETFs outlines plans for the issuer to launch ETFs that will greatly expand its offering of buffered ETFs.

Currently the firm offers nine ETFs (with another three set to roll out later this year) that offer limited upside and downside exposure to the S&P 500 Price Index and that reset annually.

The latest batches will offer Buffer, Power Buffer and Ultra Buffer versions of funds linked to the following indexes:

• MSCI Emerging Markets Investable Market Index – Price Return
• MSCI EAFE Investable Market Index – Price Return
• NASDAQ-100 Price Index
• Russell 2000 Price Index

Although the ETFs are technically actively managed, the Buffer methodology protects against up to 10% of losses in the underlying index, while the Power Buffer methodology protects against up to 15%. Finally, the Ultra Buffer methodology covers a 30% window of loss: It can allow investors to experience a 5% loss, but they are protected from any declines beyond that up to a 35% loss.

The funds will use flexible exchange options to gain their exposure to the designated index, and the upside caps will be set based on the prices of those options at the start of the one-year period being covered.

Currently, Innovator offers three sets of buffered ETFs—tied to the S&P 500 Price Index and using a similar methodology—that reset in January, July and October. Another trio of funds is expected to launch in April.

It is not clear in the latest filings if Innovator will roll out quarterly versions of the ETFs, but what’s notable about the filings is that, should the ETFs all launch, investors will be able to construct a fully diversified equity portfolio of funds offering buffered exposure to their related indexes.

Contact Heather Bell at [email protected]