Trevor Terrell, SVP, Head of Distribution, Innovator ETFs joined Keith Black, Managing Director, RIA Channel to discuss how advisors are leveraging defined outcome ETFs to manage risk and navigate today’s market challenges.
“Defined Outcome ETFs, are simply ETFs with built-in risk management,” says Terrell. The firm’s suite of Defined Outcome ETFs™ allows investors to maintain exposure to the market, but with a pre-determined level of downside protection. Since launching the first Defined Outcome ETF™ product just five years ago, Innovator has launched more than 90 ETFs and gathered more than $10B in ETF assets, over half of which were gathered in 2022.
“In a year where both equities and fixed income is down, it’s a very relevant product,” says Terrell on growing investor demand. Against today’s volatile market backdrop, Defined Outcome ETFs™ are increasingly popular for investors nearing retirement, in retirement, or looking to hedge their equity exposure. From an asset allocation standpoint, advisors are leveraging these protection-focused ETFs as a complement to their pure equity exposure or as a core fixed income replacement.
Compared to traditional structured products or indexed annuities, Defined Outcome ETFs aim to deliver the same level of protection, but with the added cost-benefits, liquidity and tax-efficiency of an ETF wrapper.
In November 2022, Innovator announced the launch of the Innovator Equity Managed Floor ETF™ (SFLR), which is sub-advised by Parametric, and seeks to deliver investors U.S. equity upside and income potential, while limiting a shareholder’s potential for maximum loss through a sophisticated options overlay.
Innovator offers true risk management tools, designed to help solve advisor challenges and integrate risk control into portfolios at scale.
For more information:
Innovator ETFs – Home
Innovator – Defined Outcomes ETFs™
Innovator – Research & Investment Strategy