Innovator Capital Management, LLC (Innovator) today announced the
anticipated upside cap ranges and return profiles for the February
Series of the S&P 500 Buffer ETFs™ – Innovator S&P 500
Buffer ETF™ - February (BFEB), Innovator S&P 500 Power Buffer
ETF™ – February (PFEB) and Innovator S&P 500 Ultra Buffer ETF™
– February (UFEB) – which are scheduled to complete their first
outcome period and reset at the end of the month. It was an
extraordinarily volatile year that saw the premier large-cap
benchmark of the U.S. stock market reach record levels in the first
month of the outcome period before the most rapid bear market
drawdown and subsequent rebound in the history of the index,
hitting fresh highs within six months of reaching its coronavirus
bear market low.
Anticipated return profiles for the Innovator S&P
500 Buffer ETFs™ – February Series, as
of 1/21/2021
Ticker |
Name |
Buffer Level |
Est. Cap Range* |
Outcome Period |
BFEB |
Innovator S&P 500 Buffer ETF™ - February |
9.00% |
14.61 – 16.69% |
12 months 2/01/21 – 1/31/22 |
PFEB |
Innovator S&P 500 Power Buffer ETF™ - February |
15.00% |
9.33 - 10.92% |
12 months 2/01/21 – 1/31/22 |
UFEB |
Innovator S&P 500 Ultra Buffer ETF™ - February |
30.00% (-5% to -35%) |
6.39 - 7.98% |
12 months 2/01/21 – 1/31/22 |
* The Estimated Cap Ranges above are based on the highest and
lowest Cap as illustrated by the Funds’ strategy from
12/21/2020-1/21/2021 and are shown gross of the 0.79% management
fee. The actual Cap for each Fund will be set at the beginning of
the Outcome Period, and is dependent upon market conditions at that
time. Periods of high market volatility could result in higher
caps, and lower volatility could result in lower caps. As a result,
the Cap set by each Fund may be higher or lower than the Estimated
Cap Range. “Cap” refers to the maximum potential return, before
fees and expenses and any shareholder transaction fees and any
extraordinary expenses, if held over the full Outcome Period.
“Buffer” refers to the amount of downside protection the fund seeks
to provide, before fees and expenses, over the full Outcome Period.
Outcome Period is the intended length of time over which the
defined outcomes are sought. Upon commencement of the Outcome
Period, the Caps can be found on a daily basis via
www.innovatoretfs.com.
The February Series of Innovator S&P 500 Buffer ETFs™ (BFEB,
PFEB, UFEB) currently have a remaining outcome period of under one
week, with known upside potential and downside buffers through
month-end. Investors who purchase prior to the rebalance will be
fully invested for the next outcome period, obtaining new upside
caps and downside buffers for the year commencing February 1, 2021.
The ETFs reset annually and can be held indefinitely. For
additional information, visit the Innovator Defined Outcome ETF
Pricing Tool.
Innovator Defined Outcome ETFs - Benefits to Advisors
- Pioneer and creator of Defined Outcome ETFs™ with 57 ETFs and
over $3.8 billion AUM across family1
- Tax-efficient exposure to five broad equity benchmarks (S&P
500, NASDAQ 100, Russell 2000, MSCI EAFE, MSCI EM), the 20+ Year
U.S. Treasury Market and now including the Stacker ETFs, the
world’s first ETFs to offer a “stacked” exposure to two or three
benchmark equity index ETFs on the upside, to a cap, with downside
exposure to the S&P 500 only
- Monthly issuance on the S&P 500 with three buffer levels
(9,15, or 30%)
Innovator's Defined Outcome ETFs™ are the subject of a patent
application filed with the U.S. Patent and Trademark Office.
In 2021, starting with the January series, Innovator will be
transitioning reference assets of the underlying options within its
Defined Outcome Buffer ETFs™ to achieve the stated outcomes with
ETF-based, or fund-based, options rather than index-based options.
Innovator’s Equity Buffer ETFs™ have traditionally used index-based
options while the Defined Outcome Bond ETFs and Stacker ETFs™ have
been constructed using fund-based options. This change is intended
to streamline market making and increase the operational
efficiencies of the tax-efficient Buffer ETFs™ and will not
materially impact shareholders. The Buffer ETFs™ will continue to
draw from the same deeply liquid options markets pools that
underpin the strategies, the level of the upside caps achieved
should be unaffected and no tax event will be triggered given the
options can be transferred in-kind. “These operational changes are
intended to harness the power and efficiencies of the ETF wrapper
even further for the benefit of our Defined Outcome Buffer ETF™
investors,” stated Bruce Bond, CEO of Innovator ETFs.
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.
About Innovator Defined Outcome ETFs™
Defined Outcome ETFs™ are the world’s first ETFs that seek to
provide investors with known ranges of future investment outcomes
prior to investing. These outcome ranges include multiple and
single upside exposure, to a cap, with defined levels of downside
risk with buffers and floors over a set amount of time. The
Innovator Defined Outcome ETFs™ cover a large spectrum of domestic
and international equities and bonds. Innovator’s category-creating
Defined Outcome ETF™ family includes Buffer ETFs™, Stacker
ETFs™ and Floor ETFs™.
The Buffer ETFs™ seek to provide the upside performance of
broadly recognized benchmarks (e.g., S&P 500, NASDAQ-100,
Russell 2000, MSCI EAFE, and MSCI Emerging Markets, as well as the
iShares 20+ Year Treasury Bond ETF (TLT)) to a cap, with built-in
buffers, over an outcome period of one year. The ETFs reset
annually and can be held indefinitely.
Each Buffer ETF™ in Innovator’s Defined Outcome ETF™ suite seeks
to provide a defined exposure to a broad market benchmark where the
downside buffer level, upside growth potential to a cap, and
Outcome Period are all known, prior to investing. In 2019,
Innovator began expanding its suite of S&P 500 Buffer ETFs™
into a monthly series to provide investors more opportunities to
purchase shares as close to the beginning of their respective
Outcome Periods as possible.
Investors can purchase shares of a previously listed Defined
Outcome ETF™ throughout the entire Outcome Period, obtaining a
current set of defined outcome parameters, which are disclosed
daily through a web tool available at:
http://innovatoretfs.com/define.
Innovator is focused on delivering defined outcome-based
solutions inside the benefit-rich ETF wrapper, retaining many of
the features that have contributed to the success of structured
products2 (e.g., downside buffer levels, upside participation,
defined outcome parameters), but with the added benefits of
transparency, liquidity, the elimination of credit risk and lower
costs afforded by the ETF structure.
About Innovator Capital Management, LLC
Awarded ETF.com's "ETF Issuer of the Year - 2019", Innovator
Capital Management LLC (Innovator) is an SEC-registered investment
advisor (RIA) based in Wheaton, IL. Formed in 2014, the firm
is currently headed by ETF visionaries Bruce Bond and John
Southard, founders of one of the largest ETF providers in the
world. Bond and Southard reentered the asset management industry to
bring to market first-of-their-kind investment opportunities,
including the Defined Outcome ETFs™, products that they felt
would change the investing landscape and bring more certainty
to the financial planning process. Innovator’s category-creating
Defined Outcome ETF™ family includes Buffer ETFs™, Stacker ETFs™
and Floor ETFs. Buffer ETFs™ and Floor ETFs™ seek to provide
investors structured exposures to broad markets, where the upside
growth potential, buffer or floor against the downside, and outcome
period are all known, prior to investing. Stacker ETFs™ are
the world’s first ETFs to offer a multiple or "stacked" exposure to
two or three benchmark index ETFs (SPY, QQQ, IWM) to a cap, with
only downside exposure to the SPY over a one year outcome period.
Having launched the first Defined Outcome ETFs™ in 2018 -- the
flagship Innovator S&P 500 Buffer ETF™ Suite – Innovator’s
solutions allow advisors to construct diversified portfolios with
known outcome ranges to aid in risk management and financial
planning. Built on a foundation of innovation and driven by a
commitment to help investors better control their financial
outcomes, Innovator is leading the Defined Outcome ETF
Revolution™. For additional information, visit
www.innovatoretfs.com.
About Cboe Global Markets, Inc.
Cboe Global Markets (Cboe: CBOE) is one of the world’s largest
exchange-holding companies, offering cutting-edge trading and
investment solutions to investors around the world. For more
information, visit www.cboe.com.
About Milliman Financial Risk Management LLC
Milliman Financial Risk Management LLC (Milliman FRM) is a
global leader in financial risk management to the retirement
industry, providing investment advisory, hedging, and consulting
services on over $143 billion in global assets as of June 30, 2020.
Milliman FRM is one of the largest and fastest-growing subadvisors
of ETFs. For more information about Milliman FRM, visit
www.Milliman.com/FRM.
Interim Period Shareholders
Unlike structured notes, which offer limited liquidity,
Innovator Defined Outcome ETFs™ trade throughout the day on an
exchange, like a stock. As a result, investors purchasing shares of
a Fund after its launch date may achieve a different payoff profile
than those who entered the Fund on day one. Innovator recognizes
this as a benefit of the Funds and provides a web-based tool that
allows investors to know, in real-time throughout the trading day,
their potential defined outcome return profile before they invest,
based on the current ETF price and the Outcome Period remaining.
Innovator’s web tool can be accessed at
http://www.innovatoretfs.com/define.
Although each Fund seeks to achieve the defined outcomes
stated in its investment objective, there is no guarantee that it
will do so. The returns that the Funds seek to provide do not
include the costs associated with purchasing shares of the Fund and
certain expenses incurred by the Fund.
Investing involves risks. Loss of principal is possible.
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 detail list of fund risks see the prospectus.
Market Disruptions Resulting from COVID-19. The outbreak
of COVID-19 has negatively affected the worldwide economy,
individual countries, individual companies and the market in
general. The future impact of COVID-19 is currently unknown, and it
may exacerbate other risks that apply to the Fund.
Foreign and Emerging Markets Risk Non-U.S. securities and
Emerging Markets are subject to higher volatility than securities
of domestic issuers due to possible adverse political, social or
economic developments, restrictions on foreign investment or
exchange of securities, lack of liquidity, currency exchange rates,
excessive taxation, government seizure of assets, different legal
or accounting standards, and less government supervision and
regulation of securities exchanges in foreign countries.
Technology Sector Risk Companies in the technology sector
are often smaller and can be characterized by relatively higher
volatility in price performance when compared to other economic
sectors. They can face intense competition, which may have an
adverse effect on profit margins.
Small-Cap Risk Small-cap companies may be more volatile
and susceptible to adverse developments than their mid- and
large-cap counterpart. In addition, the small-cap companies may be
less liquid than larger companies.
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.
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.
Investors purchasing shares after an outcome period has begun
may experience very different results than funds' investment
objective. Initial outcome periods are approximately 1-year
beginning on the funds' inception date. Following the initial
outcome period, each subsequent outcome period will begin on the
first day of the month the fund was incepted. After the conclusion
of an outcome period, another will begin.
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 Funds' 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.
The Funds with buffer mechanisms only seek to provide
shareholders that hold shares for the entire Outcome Period with
their respective buffer level against Reference Asset losses during
the Outcome Period. You will bear all Reference Asset losses
exceeding 9, 15 or 30%. Depending upon market conditions at the
time of purchase, a shareholder that purchases shares after the
Outcome Period has begun may also lose their entire investment. For
instance, if the Outcome Period has begun and the Fund has
decreased in value beyond the pre-determined buffer, an investor
purchasing shares at that price may not benefit from the buffer.
Similarly, if the Outcome Period has begun and the Fund has
increased in value, an investor purchasing shares at that price may
not benefit from the buffer until the Fund's value has decreased to
its value at the commencement of the Outcome Period.
THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY
WITH RESPECT TO THE PRODUCT(S).
Cboe Global Markets, Inc., and its affiliates do not
recommend or make any representation as to possible Benefits from
any securities, futures or investments, or third-party products or
services. Cboe Global Markets, Inc., is not affiliated with S&P
DJI, Milliman, or Innovator Capital Management. Investors should
undertake their own due diligence regarding their securities,
futures and investment practices.
Cboe Global Markets, Inc., and its affiliates make no
warranty, expressed or implied, including, without limitation, any
warranties as of merchantability, fitness for a particular purpose,
accuracy, completeness or timeliness, or as to the results to be
obtained by recipients of the products.
* ETF.com’s editorial team chose the finalists and then
the ETF.com Awards Selection Committee, an independent panel
comprised of fifteen of the ETF industry’s leading analysts,
consultants and investors, decided the winners.
Innovator ETFsTM, Defined Outcome ETFTM, Buffer ETFTM, Enhanced
ETFTM, Define Your FutureTM, Leading the Defined Outcome ETF
RevolutionTM and other service marks and trademarks related to
these marks are the exclusive property of Innovator Capital
Management, LLC.
The Funds' investment objectives, risks, charges and expenses
should be considered 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.
Copyright © 2020 Innovator Capital Management, LLC.
800.208.5212
###
1 AUM in all Innovator Defined Outcome ETFs as of 1.21.2021.
2 Structured notes and structured annuities are financial
instruments designed and created to afford investors exposure to an
underlying asset through a derivative contract. It is important to
note that these ETFs are not structured notes or structured
annuities.
Paul Damon
Innovator ETFs
+1 802.999.5526
paul@keramas.net
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