Trevor Terrell, Senior Vice President and Head of Distribution at Innovator ETFs joined Keith Black, Managing Director of RIA Channel, to discuss defined outcome ETFs with built-in risk management.
Innovator manages $15 billion in ETFs that deploy options to deliver more predictable return outcomes and built-in risk management. For example, an equity investor can maintain exposure to a market index while gaining downside protection and capping returns. Some investors will split their equity exposure with a portion in traditional index funds and the balance in defined outcome or enhanced income funds.
Innovator launched the first principal protected equity ETF, the Equity Defined Protection ETF (TJUL), and experienced $200 million of inflows in less than six months. From the starting date of the ETF, TJUL offers investors two years of exposure to the S&P 500 Index with no downside risk and an upside return opportunity of over 16%.
Innovator also offers defined income ETFs, which offer predictable income, a high stated yield, and various levels of downside protection in the equity market. While Innovator has focused on ETFs to date, Terrell anticipates that managed accounts will be available through turnkey asset management programs (TAMPs) in 2024.
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