Rough Waters Ahead? Enter Innovator’s 100% Buffer ETFs™

Rough Waters Ahead? Enter Innovator’s 100% Buffer ETFs™

These new ETFs are designed to give investors 100% downside protection.

If the front half of 2024 was mostly smooth sailing for investors, the back half may offer plenty to keep an eye on.

Having recently hinted at a potential rate cut later in the year, the Fed has already set itself up to disappoint the market, should inflationary pressures persist. If the last two Federal elections are any indication, the vote in November will be hotly contested with the potential for an extended period of uncertainty. Throw Russia’s ongoing war with Ukraine, the tension in the Middle East, and the market’s all-time highs into the mix, and investors couldn’t be blamed for pausing to consider their current approach to portfolio risk management.

Enter Innovator’s 100% Buffer ETFs™  

For investors who are concerned about a potential downturn, but also have FOMO (fear of missing out) on further market upside, Innovator has issued a sleek solution. 

Listed on July 1, Innovator’s 100% Buffer ETFs™ are designed to provide a 100% buffer against losses*, and a defined level of U.S. equity upside over each outcome period. This means investors can invest knowing exactly how much upside they’ll get if the market climbs, while also feeling confident they’ll be protected if it falls.

For example, the Innovator Defined Protection ETF – 6 mo Jan/Jul, offers upside potential of 5.00% with 100% downside protection over a 6-month outcome period ending December 31. This upside potential is nearly double that of money-market or short-term bond funds, but still comes with downside protection. And the timing is advantageous given the uncertainty over the 6-month horizon.

In addition to offering higher upside potential than short-term interest rates, these ETFs also offer the potential for tax alpha through their ability to be taxed at capital gains rates rather than as ordinary income. For income earners in the highest tax bracket, the difference between a 37% tax rate and a 20% tax rate is no small thing, especially compounded over time.

For investors who want to lock in higher upside potential over a longer period, Innovator is also launching 100% Buffer ETFs™ with 1-year and 2-year outcome periods. If the shorter outcome period aligns with a stable or rising-rate outlook, these longer tenors would have greater appeal to investors who think it’s likely the Fed will cut rates soon.

Choosing a longer outcome period today allows an investor to lock in a higher cap that may not be available down the road when shorter outcome periods are resetting. If you think the Fed is tilting dovish, you may want to jump on these higher longer-term caps before they disappear.

Innovator’s 100% Buffer ETFs™ Listed 7/1 

performance

In addition to getting cash off the sidelines, these ETFs may also be an effective way for skittish investors to dip their toe back into the markets. Retirees and pre-retirees can be forgiven for wanting to take less risk; but most still need higher returns than cash and short-term bonds can deliver. 100% Buffer ETFs thread this needle by offering greater upside potential, but with 100% built-in protection that mirrors the loss profile of cash.

So, whether you’re focused on the uncertainty surrounding Trump vs Biden, Powell vs inflation, or a market that seems set for a correction, these ETFs offer a way for you to maintain exposure to the market should it keep climbing and a buffer against 100% of losses should it fall. 
 

* Before fees and expenses.

Alpha is the excess return of an investment relative to the return of a benchmark index.

The Funds have characteristics unlike many other traditional investment products and may not be suitable for all investors. For more information regarding whether an investment in the Fund is right for you, please see "Investor Suitability" in the prospectus.

The Funds face numerous market trading risks, including active markets risk, authorized participation concentration risk, buffered loss risk, cap change risk, capped upside return risk, correlation risk, liquidity risk, management risk, market maker risk, market risk, non-diversification risk, operation risk, options risk, trading issues risk, upside participation risk and valuation risk. For a detailed list of fund risks see the prospectus.

There is no guarantee the Fund will be successful in providing the sought-after protection. If the Outcome Period has begun and the Underlying ETF has increased in value, any appreciation of the Fund by virtue of increases in the Underlying ETF since the commencement of the Outcome Period will not be protected by the Buffer, and an investor could experience losses until the Underlying ETF returns to the original price at the commencement of the Outcome Period.

Fund shareholders are subject to an upside return cap (the "Cap") that represents the maximum percentage return an investor can achieve from an investment in the funds' for the Outcome Period, before fees and expenses. If the Outcome Period has begun and the Fund has increased in value to a level near to the Cap, an investor purchasing at that price has little or no ability to achieve gains but remains vulnerable to downside risks. Additionally, the Cap may rise or fall from one Outcome Period to the next. The Cap, and the Fund's position relative to it, should be considered before investing in the Fund. The Fund's website, www.innovatoretfs.com, provides important Fund information as well information relating to the potential outcomes of an investment in a Fund on a daily basis.

These Funds are designed to provide point-to-point exposure to the price return of the Reference Asset via a basket of Flex Options. As a result, the ETFs are not expected to move directly in line with the Reference Asset during the interim period.

FLEX Options Risk The Fund will utilize FLEX Options issued and guaranteed for settlement by the Options Clearing Corporation (OCC). In the unlikely event that the OCC becomes insolvent or is otherwise unable to meet its settlement obligations, the Fund could suffer significant losses. Additionally, FLEX Options may be less liquid than standard options. In a less liquid market for the FLEX Options, the Fund may have difficulty closing out certain FLEX Options positions at desired times and prices. The values of FLEX Options do not increase or decrease at the same rate as the reference asset and may vary due to factors other than the price of reference asset.

Investing involves risk. Principal loss is possible. Innovator ETFs are distributed by Foreside Fund Services, LLC.

The Fund's investment objectives, risks, charges and expenses should be considered carefully before investing. The prospectus and summary prospectus contain this and other important information, and it may be obtained at innovatoretfs.com. Read it carefully before investing.

The following marks: Accelerated ETFs®, Accelerated Plus ETF®, Accelerated Return ETFs®, Barrier ETF™, Buffer ETF™, Defined Outcome Bond ETF®, Defined Outcome ETFs™, Defined Protection ETF™, Define Your Future®, Enhanced ETF™, Floor ETF®, Innovator ETFs®, Leading The Defined Outcome ETF Revolution™, Managed Buffer ETFs®, Managed Outcome ETFs®, Step-Up™, Step-Up ETFs™, Target Protection ETF™ and all related names, logos, product and service names, designs, and slogans are the trademarks of Innovator Capital Management, LLC, its affiliates or licensors. Use of these terms is strictly prohibited without proper written authorization.

 

Innovator is dedicated to providing ETFs with built-in risk management that offer investors a high level of predictability around their investment outcomes. Today, with more than 100 ETFs and $19 billion in AUM, Innovator is the industry’s leading provider of Defined Outcome ETFs™.