Chicago, IL, May 18, 2020 (GLOBE NEWSWIRE) -- Innovator Capital Management, LLC (Innovator) announced today plans for the launch of the Innovator S&P 500 Diversified Power Buffer ETF (BUFF) in July. BUFF will invest equally in each of Innovator’s 12 monthly S&P 500 Power Buffer ETFs and rebalance semi-annually. The S&P 500 Power Buffer ETFs seek to provide a buffer against the first 15% of losses in the S&P 500 and upside performance to a cap over a one-year outcome period; they are part of Innovator’s category-creating Defined Outcome ETF™ family.
To launch BUFF, Innovator will make changes to the Lunt Low Vol/High Beta Tactical ETF (LVHB), including its name, ticker symbol, underlying index, investment objective, management fee and strategy.
BUFF will seek to offer investors a managed portfolio (an ETF of ETFs) that will invest equally across all twelve monthly S&P 500 Power Buffer ETFs – providing a ladder of buffered S&P 500 exposures. The twelve underlying buffered S&P 500 exposures each have a different upside cap level and period of time until their annual reset, but share a 15% buffer against losses in the S&P 500 Index over their outcome period. Innovator’s intention with BUFF is to offer an ETF that can provide investors a managed approach to buffered equity investing that maintains upside growth potential by continuously participating in new upside caps as the underlying ETFs reset monthly – and which can be allocated to at any point during the year.
Bruce Bond, CEO of Innovator ETFs, said, “The Innovator S&P 500 Diversified Power Buffer ETF (BUFF) will streamline the process of investing in our revolutionary Defined Outcome ETFs. We believe BUFF will allow investors to take advantage of the foundation we’ve laid as the pioneers in Defined Outcome ETFs and the infrastructure that we’ve built in issuing monthly series of the S&P 500 Buffer ETFs. With BUFF, Innovator moves closer to our long-term vision of providing a full and diversified suite of Defined Outcome ETFs for advisors and is consistent with offering investors effective, transparent and scalable risk management tools they can understand in an ETF.
BUFF will be rebalanced semi-annually, charge 20 basis points1 and seeks to provide investors with a simplified, efficient solution to buffered equity investing. It is anticipated the ETF will provide investors with lower volatility (standard deviation)2, beta3 and drawdowns relative to the S&P 500 while capturing a measure of the capital appreciation potential of U.S. domestic large-cap stocks, the largest equity market globally by capitalization and typically the most significant allocation in most diversified portfolios.
“Recent historically volatile market conditions and the wide range of forecasts for the economic and market climate ahead highlight that having a potential buffer against the market has never been more important. Advisors know that the estimated 10,000 Baby Boomers retiring each day don’t want to make their money twice. Reducing risk is crucial to overcoming investors’ worst behavioral tendencies, like selling at the wrong time because portfolios were mismatched with investors’ risk tolerance. With BUFF, investors will be able to achieve constant diversified buffered exposure to the S&P 500 Index, locking in new caps as each monthly series resets while decreasing market losses and smoothing out the overall ride in equities,” Bond continued.
As an ETF of ETFs, BUFF is designed to be bought and/or sold without regard for the outcome period associated with the underlying individual ETFs. The strategy, as measured by its index – the Refinitiv Diversified Power Buffer Strategy Index – seeks to provide lower volatility (standard deviation), beta and drawdowns relative to the S&P 500. While BUFF will invest in Defined Outcome Buffer ETFs – in an equal weighted portfolio of all twelve monthly issues of the S&P 500 Power Buffer ETFs, which have a 15% buffer against loss in the S&P 500 – the fund will not be a Defined Outcome product with an upside cap and downside buffer nor an outcome period.
Recently awarded “ETF Issuer of the Year – 2019” by ETF.com, Innovator’s Defined Outcome ETFs have taken in over $1.1 billion net inflows year-to-date, including $513 million in March, which saw the largest monthly outflow from mutual funds and ETFs on record, according to Morningstar.
BUFF will seek investment results that correspond generally (before fees and expenses) to the price and yield of the Refinitiv Innovator Diversified Power Buffer Strategy Index. BUFF will generally invest at least 80% of its net assets (including investment borrowings) in securities comprising this Index. The Index will be developed, maintained and sponsored by Refinitiv/Thomson Reuters. The Index is comprised of the shares of the following twelve underlying Innovator S&P 500 Power Buffer ETFs:
- Innovator S&P 500 Power Buffer ETFÔ – January (PJAN)
- Innovator S&P 500 Power Buffer ETFÔ – February (PFEB)
- Innovator S&P 500 Power Buffer ETFÔ – March (PMAR)
- Innovator S&P 500 Power Buffer ETFÔ – April (PAPR)
- Innovator S&P 500 Power Buffer ETFÔ – May (PMAY)
- Innovator S&P 500 Power Buffer ETFÔ – June (PJUN)
- Innovator S&P 500 Power Buffer ETFÔ – July (PJUL)
- Innovator S&P 500 Power Buffer ETFÔ – August (PAUG)
- Innovator S&P 500 Power Buffer ETFÔ – September (PSEP)
- Innovator S&P 500 Power Buffer ETFÔ – October (POCT)
- Innovator S&P 500 Power Buffer ETFÔ – November (PNOV)
- Innovator S&P 500 Power Buffer ETFÔ – December (PDEC)
BUFF’s investment performance, tracking its Index, will largely depend on the investment performance of the underlying ETFs in which the Fund invests, subject to the respective caps and buffers of the underlying ETFs. There is no guarantee the underlying funds will achieve their investment objectives.
The Board of Trustees of the Innovator ETFs Trust II also approved a reduction in the annual unitary management fee paid by shareholders to Innovator Capital Management, LLC the Fund’s investment adviser, from 0.49% of the Fund’s average daily net assets to 0.20% of the Fund’s average daily net assets. The Adviser has overall responsibility for selecting and monitoring the Fund’s investment and managing the Fund’s business affairs. Penserra Capital Management LLC, will remain as the sub-adviser to the Fund, with the responsibility for managing the Fund’s investment program in pursuit of its investment objective. The reduction in the Fund’s management fee will have no effect on the services provided to the Fund by the Adviser and Sub-Adviser and will be effective on or around July 15, 2020. In addition to the Fund’s own fees and expenses, the Fund will pay indirectly a proportional share of the fees and expenses of the underlying ETFs in which it invests, included advisory and administration fees.
The Fund will continue to list and trade its shares on Cboe BZX, however on or around July 15, 2020, the Fund will trade its shares under the new ticker symbol “BUFF”. The Fund will obtain a new CUSIP and other identifiers.
A registration statement relating to the changes described for the Fund has been filed with the Securities and Exchange Commission, but has not yet become effective. We may not effectuate the conversion until the registration statement filed with the Securities and Exchange Commission is effective. This press release and the preliminary prospectus contained in the registration statement are not offers to sell the Fund and we are not soliciting offers to buy the Fund in any state where the offer or sale is not permitted.
-----------------------
Innovator Defined Outcome Buffer ETFs - Benefits to Advisors
- Pioneer and creator of Defined Outcome ETFs with 46 ETFs and over $2.7 billion AUM4
- Tax-efficient exposure to five broad benchmark indexes (S&P 500, NASDAQ 100, Russell 2000, MSCI EAFE, MSCI EM)
- Lowest-cost available5
- Monthly issuance on the S&P 500 with three buffer levels (9,15, or 30%)
- Only sponsor with a track record of completed Outcome Periods6
Innovator's Defined Outcome ETFs are the subject of a patent application filed with the U.S. Patent and Trademark Office.
Investing involves risk including possible loss of principal. BUFF is subject to the risks of the underlying ETFs which are described in detail below.
The underlying Innovator Defined Outcome ETFs 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 Buffer ETFs
Defined Outcome Buffer ETFs are the world’s first ETFs that seek to provide investors the upside performance of broadly recognized indexes (e.g., S&P 500, Nasdaq 100, Russell 2000, MSCI EAFE, and MSCI Emerging Markets) 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 index 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 products7 (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
Innovator Capital Management, LLC 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. Innovation is our hallmark and acts as a guide to our company principles. Innovator is committed to helping investors better control their financial outcomes by providing investment opportunities they never considered or thought possible. For additional information, visit www.innovatoretfs.com.
About Cboe Global Markets, Inc.
Cboe Global Markets, Inc. (Cboe: CBOE | Nasdaq: 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.
Fund shareholders in the underlying Innovator Defined Outcome ETFs 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 underlying Funds only seek to provide shareholders that hold shares for the entire Outcome Period with their respective buffer level against Index losses during the Outcome Period. You will bear all Index 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.
FLEX Options Risk The underlying funds 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 underlying fund could suffer significant losses. Additionally, FLEX Options may be less liquid than standard options. In a less liquid market for the FLEX Options, an underlying 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.
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.
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.
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.
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.
Nasdaq® is a registered trademark of Nasdaq, Inc. (which with its affiliates is referred to as the "Corporations") and is licensed for use by Innovator Capital Management, LLC. The Product(s) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations.
THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).
The Innovator Russell 2000 Power Buffer ETF (the “Fund”) has been developed solely by Innovator Capital Management, LLC. The “Fund” is not in any way connected to or sponsored, endorsed, sold or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). FTSE Russell is a trading name of certain of the LSE Group companies. All rights in the Russell 2000 Index (the “Index”) vest in the relevant LSE Group company, which owns the Index. “FTSE®” “Russell®”, and “FTSE Russell®” are trade marks of the relevant LSE Group company and are used by any other LSE Group company under license.
The Index is calculated by or on behalf of FTSE International Limited or its affiliate, agent or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Fund. The LSE Group makes no claim, prediction, warranty or representation either as to the results to be obtained from the Fund or the suitability of the Index for the purpose to which it is being put by Innovator Capital Management, LLC.
The ETFs referred to herein is not sponsored, endorsed, or promoted by MSCI Inc. or based upon the MSCI EAFE and MSCI Emerging Markets Indexes. MSCI Inc. bears no liability with respect to the ETFs.
MSCI, MSCI EAFE, and MSCI Emerging Markets are trademarks or service marks of MSCI Inc. or its affiliates (“Marks”) and are used hereto subject to license from MSCI. All goodwill and use of Marks inures to the benefit of MSCI and its affiliates. No other use of the Marks is permitted without a license from MSCI.
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.
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.
Innovator ETFs are distributed by Foreside Fund Services, LLC.
Copyright © 2020 Innovator Capital Management, LLC.
800.208.5212
1 BUFF will charge .20% of invested assets after assumed expenses of the underlying funds, which all currently have a management fee of.79% of invested assets.
2 Volatility is a statistical measure of the dispersion of returns for a given security or market index.
3 Beta is a measure of the volatility of an individual stock in comparison to the unsystematic risk of the entire market.
4 AUM in all Innovator Defined Outcome ETFs as of 5.15.2020.
5 Innovator S&P 500 Buffer ETFs have a 0.79% management fee. Other S&P 500 based Buffer ETFs available to US investors have a higher 0.85% management fee.
6 Innovator Capital Management, LLC is the only issuer that has Defined Outcome ETFs available that have completed a one-year Outcome Period.
7 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.