CHICAGO, July 18, 2023 (GLOBE NEWSWIRE) -- Innovator Capital Management, LLC (Innovator), pioneer and provider of the largest lineup of Defined Outcome ETFs, today announced the launch of the Equity Defined Protection ETF (TJUL). The first of its kind ETF seeks to provide investors with the upside return of the SPDR® S&P 500® ETF Trust (SPY), to a 16.62% cap, and a 100% buffer against SPY losses over a two-year outcome period.
Investors facing uncertain market conditions and the threat of a potential recession have historically only had access to this type of investment strategy in structures that carry high investment minimums, long lockup periods, or high tax burdens. In spite of their features, investors have poured $billions into those structures in order to gain exposure to the compelling underlying risk/reward profile. With the availability of these strategies now in the ETF structure, investors have flocked to defined outcome ETFs, bringing Innovator’s suite to over $13 billion in AUM (as of 7/17/2023). The Equity Defined Protection ETF expands Innovator’s industry-leading range of defined outcome offerings. With this strategy, Innovator hopes to help investors shift their portfolios for downside risk, without having to sacrifice equity market exposure by moving to cash.
“When investors become concerned about market conditions, we see a surge of dollars move into bank deposits, cash, market-linked CDs, and treasuries. We continue to hear that investors are looking for a way to get back into the market without sitting on the sidelines, but that the level of risk is simply too high,” said Graham Day, Chief Investment Officer at Innovator. “Our aim is for TJUL to provide a way for our clients to stay in the market with significant built-in risk management.”
Unlike fixed indexed annuities and market-linked CDs, TJUL is expected to provide investors a beneficial 1099 tax treatment, does not carry bank credit risk, and does not require a minimum investment.†
TJUL Investment Objective: The Fund seeks to provide investors with returns that match the upside price return of the SPDR® S&P 500® ETF Trust, to an upside cap (prior to taking into account management fees and other fees) while providing a buffer against 100% of SPDR® S&P 500® ETF Trust losses (prior to taking into account management fees and other fees), over the period from July 18, 2023 to June 30, 2025.
†ETFs use creation units, which hallow for the purchase and sale of assets in the fund collectively. Consequently, ETFs usually generate fewer capital gain distributions overall, which can make them somewhat more tax-efficient than mutual funds. Defined Outcome ETFs are not backed by the faith and credit of an issuing institution, so they are not exposed to credit risk.
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.
Investing involves risks. Loss of principal is possible. The Fund faces 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 detail 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.
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.
The Funds' investment objectives, risks, charges and expenses should be considered carefully before investing. The prospectus contains this and other important information, and it may be obtained at innovatoretfs.com. Read it carefully before investing.
Innovator ETFs are distributed by Foreside Fund Services, LLC.