ETFs
Innovator launches 2 international buffered ETFs
On Monday, Innovator expanded its Buffer ETF lineup with the launch of a pair of new funds.
IBUF aims to provide investors with returns similar to those of the iShares MSCI EAFE Exchange Traded Fund (EFAE A), within the limit of a ceiling of 3.38%. The fund’s capped upside is accompanied by a 10% downside cushion over the outcome period.
EFA allocates assets to developed markets outside of North America, including Japan, Australia and Western Europe. The fund remains a very popular investment option in developed markets, with over $53 billion in assets under management.
With a focus on emerging markets, EBUF strives to track the performance of iShares MSCI Emerging Markets ETF (ESEE A-)Like the IBUF, the fund offers a capped upside potential of 3.52%, as well as a 10% margin of safety over the performance period.
EEM provides access to mid- and large-cap assets in emerging markets. The countries to which EEM has significant exposure are China, Taiwan, South Korea and India. The fund manages more than $19 billion in assets.
Both IBUF and EBUF invest primarily in FLEX options on their respective underlying ETFs. By using FLEX options, both funds can provide liquid and flexible investment exposure to international equities, with a defensive buffer cap to mitigate risk.
The results period for both funds ends on a quarterly basis. At the end of each outcome period, IBUF and EBUF will invest in new FLEX options with three-month expiration dates and begin the next outcome period.
These funds can be retained indefinitely, as the conclusion of the current results period will naturally carry over into the next period. However, the upside caps for both funds may vary depending on market conditions at the start of the outcome period.
Innovator currently has over 120 U.S.-listed ETFs. In total, these funds manage over $18 billion in assets.