Bruce Bond, Co-Founder of Innovator Capital Management, talks about defined outcome products, equity floor ETFs, and Innovator's latest defined income ETF solutions. They discuss the benefits of defined outcome ETFs, unique income products based on equity options, and strategies for managing risk and reward in investments. They also explore advisors' allocation strategies and differentiation in the market.
Innovator ETFs offer buffers for 9% market decline protection and barriers for defined downside risk levels.
Collaboration with Parametric introduces Q-Floor and S-Floor ETFs providing downside protection and exposure to NASDAQ 100 and S&P 500.
Deep dives
Innovator ETFs: Offering Defined Outcome Strategies in ETFs
In this podcast episode, Bruce Bond, co-founder and CEO of Innovator Capital Management, discusses the unique approach of Innovator ETFs in the ETF industry. He explains that Innovator ETFs focuses on offering defined outcome strategies, which provide investors with a clear understanding of their risk and potential reward. Bond compares the two categories of Innovator ETFs: buffers and barriers. Buffers provide protection for the first 9% of market decline, while barriers offer a defined level of downside risk, such as a 10%, 20%, 30%, or 40% barrier. Additionally, Bond introduces two new products in collaboration with Parametric: the Q-Floor and S-Floor ETFs, which provide downside protection with exposure to the NASDAQ 100 and S&P 500, respectively. He also discusses the defined income product that offers an attractive fixed income option with different barrier levels. Bond highlights the benefits of these products, including reliable outcomes, risk mitigation, and income generation. He concludes by encouraging advisors to reach out to Innovator ETFs for further information and assistance.
Understanding the Differences Between Buffers and Barriers
Bruce Bond, co-founder and CEO of Innovator Capital Management, explains the differences between buffers and barriers in the podcast episode. Buffers offer protection for the first 9% of market decline, providing investors with downside protection. On the other hand, barriers provide a defined level of downside risk, such as a 10%, 20%, 30%, or 40% barrier. While buffers allow investors to participate in market upside while limiting potential losses, barriers provide a cushion against market declines but do not cap the upside potential. Bond emphasizes that these defined outcome strategies offer investors a clear understanding of their risk and reward, providing a level of control that is not achievable with traditional investment products.
Introducing the Q-Floor and S-Floor ETFs
Innovator Capital Management has collaborated with Parametric to introduce two new ETFs: the Q-Floor and S-Floor ETFs. The Q-Floor ETF provides investors with exposure to the NASDAQ 100 while offering a 10% floor, meaning investors have 10% downside protection. The S-Floor ETF offers exposure to the S&P 500 with the same downside protection. These ETFs utilize a combination of equity options and custom cover call writing strategies to provide investors with both downside protection and potential upside participation. The Q-Floor and S-Floor ETFs aim to provide investors with a reliable, predictable, and defined outcome based on the performance of the respective indexes.
Exploring the Defined Income Product
Innovator Capital Management also offers a defined income product that provides investors with a reliable income stream. The product features barriers, which act as a level of downside protection. Investors can choose from different barrier levels, such as 10%, 20%, 30%, or 40%, depending on their risk tolerance. The defined income product offers a fixed income option that pays a specified income annually, with quarterly payments. The income level is determined at the beginning of the investment period and remains consistent throughout, providing investors with a predictable income stream. While investors receive regular income, they are exposed to the downside risk beyond the chosen barrier level. This product aims to provide investors with a stable income stream while protecting them from excessive market declines.
On today's show, Ben Carlson and Michael Batnick are joined by Bruce Bond, Co-Founder and CEO of Innovator Capital Management to discuss: behavioral finance, and the popularity of defined outcome products during bull markets, how equity floor ETFs work, Innovator's latest defined income ETF solutions, and much more!
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