Innovator Capital Management launched the Innovator Hedged TSLA Strategy ETF (TSLH) on July 26, 2022. TSLH aims to provide investors with access to Tesla (TSLA), one of the best performing large-cap stocks in the market, while mitigating risk from volatility. TSLH will be listed as the first ETF to provide long exposure to a single-stock with built-in risk management.
TSLH offers upside exposure to Tesla, inc. when TSLA stock rises and attempts to prevent downside risk by targeting a protective floor against TSLA losses greater than around 10% per quarter. This means that an investor of TSLH can’t lose more than 10%, regardless of TSLA’s performance.
TSLH is a hedged, single-stock ETF. Instead of investing directly in TSLA, it invests in options tied to the company. An investor’s return profile depends on the time that an investor purchases and sells shares of the ETF, and investors can hold shares indefinitely.
To manage risk, the portfolio is split into two parts. About 10% of the ETF’s portfolio is composed of a call option spread on TSLA using FLEX Options, which are customized equity or index contracts that allow investors to customize terms for exchange-equity and index options. The remaining 90% of the portfolio is composed of Treasury Bills (cash equivalents) to create a potential 10% floor against significant losses on a quarterly basis.
This 10/90 portfolio build allows investors to hold shares for a full quarter to participate in TSLA’s potential upside, while being protected against losses greater than 10% in that quarter. TSLH actively resets its portfolio each quarter.
Innovator Capital Management aims to create revolutionary exchange-traded funds (ETFs) that change the investing landscape. Innovator offers inventive risk management tools, designed to help advisors integrate risk control into portfolios.
For more insights, register & watch Innovator’s webcast: To hedge or not to hedge: The case for Buffer ETFs™ in the current environment.
In the second half of 2022, financial markets appear at odds about what lies ahead: the equity market continues to trade at elevated valuations while the bond market signals recession.
In the midst of this uncertainty, investors need not be paralyzed on the sidelines. Join us on Tuesday, August 2nd to learn how Buffer ETFs™ can help investors to maintain exposure to the stock market’s upside potential, with a built-in buffer against downside losses.
We’ll also provide a brief overview of our latest fund, the Innovator Hedged TSLA Strategy ETF.
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