Innovator Capital Management launched a buffer ETF Tuesday with 100% downside protection. The fund trades under the ticker TJUL and will track the S&P 500 over a two-year period. Our aim is for TJUL to provide a way for our clients to stay in the market with significant built-in risk management.
The Innovator Equity Defined Protection ETF, the first exchange-traded fund aiming to provide 100% downside protection, launched on Tuesday.
Innovator Capital Management said it will cap the upside return of the SPDR S&P 500 ETF Trust (SPY) at 16.62% prior to fees, while offering a 100% buffer prior to fees against SPY losses over the period from July 18, 2023, to June 30, 2025.
Innovator is charging an annual 0.79% fee for the ETF, which trades under the ticker TJUL.
"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, in a statement.
"Our aim is for TJUL to provide a way for our clients to stay in the market with significant built-in risk management."
Innovator also said there's no guarantee the fund will be successful in providing protection, noting that if the ETF increases in value after launching, then any appreciation won't be protected, and an investor could see losses until the ETF returns to the original launch price.
The company offers more than 50 buffer funds, and Innovator said its suite of funds has more than $13 billion in assets under management.
Also known as buffer ETFs or defined outcome funds, they are seen as alternatives to insurance products, such as fixed-income annuities.
Innovator said the ETF structure benefits investors more, thanks to high liquidity, no minimum purchasing requirements, and a lack of withdrawal fines. (source)