Innovator Buffer Step-Up Strategy ETF (BSTP)

Overview

The Innovator Buffer Step-Up Strategy ETF seeks to provide exposure to the returns of an underlying index, up to a predetermined cap, while providing a buffer against a defined level of losses. It utilizes options to achieve this buffered and capped exposure, typically rebalanced annually.

Reputation and Reliability

Innovator ETFs is known for its defined outcome ETFs, offering a range of products with different buffer levels and upside caps. They are generally considered a reliable issuer with a focus on innovative ETF strategies.

Management Expertise

Innovator ETFs has a team with expertise in structured products and options strategies, necessary for managing defined outcome ETFs.

Goal

To provide investors with exposure to the upside potential of a specified index, up to a cap, while providing a buffer against a defined level of downside losses over a specific period.

Investment Approach and Strategy

Strategy: The ETF utilizes a defined outcome strategy using options to provide a buffered and capped return profile tied to an underlying index.

Composition The ETF holds a portfolio of Flex Options that resets approximately annually. The actual holdings are options contracts linked to the relevant underlying index.

Market Share: Varies significantly depending on the specific underlying index and buffered outcome period; information on current composition cannot be accurately extracted. The market share of this ETF compared to other buffered ETF's varies.

Total Net Assets (AUM): Unavailable. Each Innovator fund has a limited life, and their aggregate AUM varies over time and as such the information isn't available

Key Competitors

• FTLS
• BUFR
• OCTO
• JAPR
• JULY
• AUGT
• SEPT

Competitive Landscape

The defined outcome ETF market is competitive, with multiple issuers offering similar buffered strategies linked to various underlying indexes. Innovator ETFs was an early mover and has a broad suite of products. Advantages include potentially higher returns than traditional fixed income, while disadvantages include capped upside and potential complexity compared to passively managed index funds.

Historical Performance: Historical performance data is not directly comparable to traditional ETFs due to the defined outcome nature. Performance depends on the underlying index's performance, the buffer level, and the upside cap.

Benchmark Comparison: Comparing the ETF's performance to the underlying index without considering the buffer and cap would be misleading. A more appropriate benchmark would be a risk-adjusted strategy or similar defined outcome ETFs.

Expense Ratio: Unavailable.

Average Trading Volume

Average trading volume can vary depending on investor demand, but they are designed to have sufficient liquidity for most users.

Bid-Ask Spread

Bid-ask spreads are generally reasonable, but can widen during periods of market volatility or lower trading volume.

Market Environment Factors

Market volatility, interest rates, and the performance of the underlying index all influence the ETF's performance. Changes in investor sentiment towards risk and fixed income alternatives also play a role.

Growth Trajectory

Growth depends on investor adoption of defined outcome strategies as a means of managing risk and generating returns. Increased awareness and education about these products may drive further growth.

Competitive Edge

Innovator ETFs has a first-mover advantage in the defined outcome ETF space. They offer a comprehensive suite of buffered and capped ETFs with varying levels of downside protection and upside potential tied to numerous indices. This wide range provides investors with flexibility in constructing portfolios to align with specific risk and return objectives. Their expertise in options strategies also provides a competitive advantage.

Volatility

Volatility is typically lower than the underlying index due to the buffer. However, the capped upside limits participation in strong market rallies.

Market Risk

The primary market risk is the performance of the underlying index. If the index declines below the buffer level, investors will experience losses. The capped upside also limits potential gains.

Ideal Investor Profile

Investors seeking defined levels of downside protection and are willing to forgo unlimited upside potential. Investors that are risk-averse, approaching retirement, or want to participate in growth without exposing their capital.

Market Risk

Suitable for long-term investors or those seeking a specific risk-return profile. The product's complexity suggests more sophisticated investors are more likely to use it. Could be used to compliment buy and hold strategies for investors.

The Innovator Buffer Step-Up Strategy ETF offers a defined outcome strategy that provides downside protection and capped upside. This ETF is suitable for risk-averse investors who are looking for a tool to shield their investments, as it mitigates risk. However, itu2019s essential to be mindful of the trade-off between limited upside and downside protection. The ETF's success is dependent on the underlying index and the market perception of defined outcome strategies.

Data Sources:

• Innovator ETFs website
• ETF.com
• SEC Filings

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor.