A group of new ETFs that are designed to offer a “stacked” or multiple exposure on the upside, to a cap, with a single exposure to the downside, are set to launch on Oct. 1.
Innovator Capital Management’s defined outcome Stacker ETFs, part of the company’s Defined Outcome ETF family, will offer advisers a potential solution to magnify equity exposures and performance potential by accessing multiple U.S. stock market return streams simultaneously and maintain downside exposure to a single benchmark, SPY, over a one-year period outcome.
“The Stackers ETFs will not be like traditional leveraged ETFs, which can produce distorted returns and higher volatility when held long-term due to their frequent, often daily, rebalancing,” the company said. “Instead, the Stacker ETFs will seek to provide asymmetrical returns over a year-long outcome period that are magnified on the upside only, to a cap, while rebalancing annually, making them more suited for longer-term investors.”
Three Stacker ETFs set to start trading on Oct. 1, 2020 are:
Innovator Triple Stacker ETF (TSOC) — seeks to provide triple upside exposures of 100% SPY + 100% QQQ + 100% IWM to a cap and downside exposure to SPY only over a one-year outcome period.
Innovator Double Stacker ETF (DSOC) — seeks to provide exposures of 100% SPY + 100% QQQ to a cap and downside exposure to SPY only, over a one-year outcome period.
Innovator Double Stacker 9 Buffer ETF (DBOC) — seeks to provide upside exposures of 100% SPY + 100% QQQ to a cap and downside exposure to SPY only with a buffer against the first 9% of losses over a one-year outcome period.
At the end of TSOC, DSOC and DBOC’s outcome period, Sept. 30, 2021, the ETFs will rebalance and reset, providing investors with new upside caps and a fresh 9% buffer, respectively, over the next one-year outcome period.