In a recent episode of "Behind the Ticker," Burke Ashenden, Head of Capital Markets at Innovator ETFs, delves into the unique offerings of Innovator ETFs with host Brad. Ashenden, who started his career in ETF trading and later transitioned to the issuer side, shares his journey and how it led him to Innovator. Innovator ETFs, founded by industry veterans Bruce Bond and John Souther, focuses exclusively on Defined Outcome ETFs. This singular focus has made Innovator a leader in this niche, with a variety of products designed to offer downside protection and defined outcomes for investors.
Ashenden explains the core concept behind Innovator's Defined Outcome ETFs, which provide a buffer against market losses in exchange for a cap on upside gains. These ETFs are constructed using a basket of flex options, which offer customizable tenors and strikes, allowing for precise defined outcomes. The firm offers various buffers, including a 9%, 15%, and 30% buffer against market losses over different periods, such as quarterly or annually. Additionally, Innovator has expanded its offerings with 100% buffer ETFs, providing complete downside protection, which has been particularly appealing to advisors and investors looking to equitize cash without principal risk.
The conversation highlights the practical applications of these ETFs. Ashenden emphasizes their utility in different market environments, particularly for conservative clients or those wary of investing at market highs. The ETFs' ability to reset within the structure without triggering taxable events and their flexibility make them an attractive alternative to traditional fixed income, especially in a high-yield, low-tax environment. Ashenden points out that these products can be effectively used as a conservative equity allocation or even as a fixed income alternative, providing attractive caps with full downside protection.
Ashenden also discusses the strategic use of Innovator's model portfolios, which combine different Defined Outcome ETFs to create customized risk-return profiles. These models help advisors implement diversified and risk-managed portfolios. He underscores the benefits of Innovator's tools available on their website, which assist advisors in analyzing potential outcomes and historical performance. Innovator ETFs' commitment to Defined Outcome strategies and their innovative approach to structured products make them a compelling choice for advisors looking to navigate volatile markets with confidence.