Defined Outcome ETFs™ Leader Innovator Anticipates No Capital Gains Distributions in 2022
CHICAGO, Dec. 23, 2022 (GLOBE NEWSWIRE) -- Innovator Capital Management, LLC (Innovator) today announced that the fast-growing exchange-traded fund (ETF) issuer and pioneer of the Defined Outcome ETFs™ anticipates no capital gains distributions for tax year 2022 by any of the 91 ETFs in the Innovator lineup, including its family of 80 Defined Outcome ETFs™ and 6 Managed Outcome ETFs™.
Furthermore, due to the operational structure of ETFs and the exchange transfer approvals for options, Innovator does not anticipate capital gains distributions for its current lineup going forward.
For more information, investors can contact the team at Innovator.
With over $5.5B inflows year-to-date1, Innovator has seen record advisor interest in its lineup of Defined Outcome ETFs ™ that use forward-looking investment strategies. The fund sponsor has amassed over $11 billion in assets under management2 after listing the first Buffer ETFs™ in August 2018, creating one of the fastest-growing categories in the investing world. As stock and bond prices both fell in 2022, Innovator achieved the most inflows of any sub-$10 billion AUM asset manager of mutual funds or ETFs for the first3, second4 and third quarters5. Innovator listed 11 ETFs in 2022, most recently including the Equity Managed Floor ETF™ ( SFLR ) and the Gradient Tactical Rotation Strategy ETF ( IGTR).
Innovator Defined Outcome ETFs - Benefits to Advisors
- Pioneer and creator of Defined Outcome ETFs™ with 80 ETFs and over $10.3 billion AUM across family6, as well as 6 Managed Outcome ETFs™ with over $280 million in AUM
- Tax-efficient exposure 7 to five broad equity benchmarks with buffers against loss (Large-cap U.S. Equity (SPY), Growth (QQQ), Small-Cap U.S. Equity (IWM), International Developed (EFA), Emerging Markets (EEM)), and the 20+ Year U.S. Treasury Market (TLT); as well as the Accelerated ETFs™, the world’s first ETFs to seek to offer a multiple of the upside return of a reference asset, up to a cap, with approximately single exposure on the downside
- Reset annually or quarterly and can be held indefinitely as core holdings
- Innovator’s Defined Outcome ETF™ lineup has amassed 187 outcome period completions with the ETFs successfully resetting for the coming outcome period8
- Monthly issuance on SPY with three buffer levels (9,15, or 30%)
Innovator’s Defined Outcome ETFs™ are the subject of a patent application filed with the U.S. Patent and Trademark Office.
The Funds 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 ETFs™
Defined Outcome ETFs ™ are the world’s first ETFs that seek to provide investors with known ranges of future investment outcomes prior to investing. These outcome ranges include multiple and single upside exposure, to a cap, with defined levels of downside risk with buffers and floors over a set amount of time. The Innovator Defined Outcome ETFs™ cover a large spectrum of domestic and international equities and bonds. Innovator’s category-creating Defined Outcome ETF™ family includes Buffer ETFs™, Accelerated ETFs™ and Floor ETFs™.
The Buffer ETFs™ seek to provide the upside performance of broadly recognized benchmarks (e.g., SPY, QQQ, IWM, EFA, and EEM, as well as TLT) 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 benchmark 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 U.S. Equity 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 products9 (e.g., downside buffer levels, upside participation, defined outcome parameters), but with the added benefits of transparency, liquidity, the elimination of credit risk 10 and lower costs afforded by the ETF structure.
About Innovator Capital Management, LLC
Awarded ETF.com’s “ETF Issuer of the Year - 2019”*, Innovator Capital Management LLC (Innovator) is an SEC-registered investment advisor (RIA) based in Wheaton, IL. Formed in 2017, the firm is currently headed by ETF visionaries Bruce Bond and John Southard, founders of one of the largest ETF providers in the world. Bond and Southard reentered the asset management industry to bring to market the Defined Outcome ETFs™, first-of-their-kind investment products that they felt would change the investing landscape and bring more certainty to the financial planning process. Innovator’s category-creating Defined Outcome ETF™ family includes Buffer ETFs™, Floor ETFs™, Accelerated ETFs™ and Managed Outcome ETFs™. Since the 2018 launch of their flagship Innovator U.S. Equity Buffer ETF™ suite, Innovator’s solutions have helped advisors construct portfolios and manage risk to fit their client’s unique financial needs. Built on a foundation of innovation and driven by a commitment to help investors better control their financial outcomes, Innovator is leading the Defined Outcome ETF Revolution™. For additional information, visit www.innovatoretfs.com.
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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.
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.
Foreign and Emerging Markets Risk. Non-U.S. securities and Emerging Markets are subject to higher volatility than securities of domestic issuers due to possible adverse political, social or economic developments, restrictions on foreign investment or exchange of securities, lack of liquidity, currency exchange rates, excessive taxation, government seizure of assets, different legal or accounting standards, and less government supervision and regulation of securities exchanges in foreign countries.
Technology Sector Risk. Companies in the technology sector are often smaller and can be characterized by relatively higher volatility in price performance when compared to other economic sectors. They can face intense competition, which may have an adverse effect on profit margins.
Small-Cap Risk. Small-cap companies may be more volatile and susceptible to adverse developments than their mid- and large-cap counterpart. In addition, the small-cap companies may be less liquid than larger companies.
FLEX Options Risk. The Fund 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 Fund could suffer significant losses. Additionally, FLEX Options may be less liquid than standard options. In a less liquid market for the FLEX Options, the 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.
These Funds are designed to provide point-to-point exposure to the price return of the Reference Asset via a basket of Flex Options. As a result, the ETFs are not expected to move directly in line with the Reference Asset during the interim period.
Investors purchasing shares after an outcome period has begun may experience very different results than funds’ investment objective. Initial outcome periods are approximately 1-year beginning on the funds’ inception date. Following the initial outcome period, each subsequent outcome period will begin on the first day of the month the fund was incepted. After the conclusion of an outcome period, another will begin.
Fund shareholders 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 Funds with buffer mechanisms only seek to provide shareholders that hold shares for the entire Outcome Period with their respective buffer level against Reference Asset losses during the Outcome Period. You will bear all Reference Asset 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.
THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).
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.
* ETF.com’s editorial team chose the finalists and then the ETF.com Awards Selection Committee, an independent panel comprised of fifteen of the ETF industry’s leading analysts, consultants and investors, decided the winners.
Innovator ETFs™, Defined Outcome ETF™, Buffer ETF™, Floor ETF™, Stacker ETF™, Enhanced ETF™, Accelerated ETF™, Managed Outcome ETF™, Define Your Future™, Leading the Defined Outcome ETF Revolution™ and other service marks and trademarks related to these marks are the exclusive property of Innovator Capital Management, LLC.
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.
Innovator ETFs are distributed by Foreside Fund Services, LLC
Copyright © 2022 Innovator Capital Management, LLC.
1 Through 12.16.2022.
2 Through 12.22.2022.
3 According to data from Morningstar Direct as cited by MFWire.com: http://www.mfwire.com/article.asp?storyID=64284&wireID=2&r=innovator&template=article&bhcp=1
4 According to data from Morningstar Direct as cited by MFWire.com: http://www.mfwire.com/article.asp?storyID=64667&wireID=2&r=innovator&template=article&bhcp=1
5 According to data from Morningstar Direct as cited by MFWire.com: http://www.mfwire.com/article.asp?storyID=65032&bhcp=1
6 ETF count and AUM in all Innovator Defined Outcome ETFs™ as of 12.22.2022, excluding Managed Outcome ETFs™ BUFF, BUFB, BSTP, PSTP, XUSP, SFLR
7 ETFs use creation units, which allow for the purchase and sale of assets in the fund collectively. Consequently, ETFs usually generate fewer capital gain distributions overall, which can make them somewhat more tax-efficient than mutual funds.
8 As of 12.01.2022
9 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.
10 Defined Outcome ETFs are not backed by the faith and credit of an Issuing institution, so they are not exposed to credit risk.