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Innovator Funds releases a recap of their October series of buffer funds

Innovator Funds releases a recap of their October series of buffer funds

Innovator Funds offers a unique set of Exchange Traded Funds (ETFs) called "defined outcome funds".  These funds offer a downside buffer and an upside cap, therefore defining what outcome you may have.  For instance, their S&P 500 Power Buffer - October (POCT) offered a buffer of 15% and a cap of 9.2% on October 1st, 2019.  If you bought the fund that day, POCT would protect the first 15% of losses and allow you to make up to 9.2% if you held the fund until it resets next October.  These figures are gross of expenses.  Innovator charges an expense ratio of 0.79% to 0.89% depending on the index you select.

You can buy and sell these funds like any other ETF.  However, if you do not buy the 1st day of it's reset, it gets a little more complicated.  As the market moves, so do the fund parameters.  So if you buy POCT on October 15th and the S&P 500 is down 2% (from Oct. 1st) then the fund may have a 13% remaining buffer (instead of 15%) but a remaining cap of 11.2% (instead of 9.2%).  Likewise, if the S&P 500 went up 2% since October 1st, then you'd likely have a remaining cap 7.2%.  You'd still have the 15% buffer, but you'd have to endure a 2% loss before that buffer kicked in. It's important to review the parameters of the funds not only initially, but also on an ongoing basis to make sure you are still well protected and have earning potential.

Innovator Funds initial offering was the S&P 500 Index in July 2018.  Since then they've expanded their indices to include the following: S&P 500, Russell 2000, Nasdaq 100, MSCI EAFE (international), and MSCI EM (emerging markets).  For the S&P 500 Index, they offer monthly funds in three varieties: Buffer, Power Buffer, and Ultra Buffer.  Recently the October series completed its initial 12-month term and they released a recap of how it performed. Click here to access it.

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