Innovator Hedged Nasdaq-100 ETF (QHDG)

Overview

The Innovator Hedged Nasdaq-100 ETF (QQQH) seeks to provide investors with exposure to the Nasdaq-100 while aiming to reduce volatility and downside risk through a built-in hedging strategy. It focuses on large-cap growth stocks in the technology sector, offering a blend of equity participation and downside protection.

Reputation and Reliability

Innovator Capital Management is known for its defined outcome ETFs and has a solid reputation for innovative investment strategies.

Management Expertise

Innovator's management team has experience in structured products and derivatives, essential for managing the hedging strategy.

Goal

To provide investment results that correspond to the performance of the Nasdaq-100 Index while seeking to hedge against potential market declines.

Investment Approach and Strategy

Strategy: The ETF employs a 'defined outcome' strategy by using options to hedge against downside risk while still participating in a portion of the upside of the Nasdaq-100.

Composition The ETF primarily holds options contracts on the Nasdaq-100 Index, combined with a portion allocated to cash or cash equivalents to collateralize the options positions.

Market Share: QoQH's market share in the defined outcome ETF sector is moderate, as the category is growing.

Total Net Assets (AUM): 146954669.7

Key Competitors

• FT Cboe Vest U.S. Equity Deep Buffer ETF - December (DECZ)
• Innovator Equity Defined Protection ETF u2013 April (TJUL)
• Innovator Equity Defined Protection ETF u2013 January (TJAA)

Competitive Landscape

The defined outcome ETF industry is competitive, with multiple issuers offering strategies that provide a buffer against market declines. QQQH differentiates itself by focusing specifically on the Nasdaq-100. Competitors offer varied approaches, target indexes, and protection levels. A potential advantage for QQQH is its concentration on the Nasdaq-100's growth potential, while a disadvantage could be the limited upside capture due to the hedging strategy.

Historical Performance: Historical performance depends on the period observed and the performance of the Nasdaq-100. Past performance is not indicative of future results.

Benchmark Comparison: The ETF's performance should be compared to the Nasdaq-100 Index and other hedged equity strategies to evaluate its effectiveness.

Expense Ratio: 0.79

Average Trading Volume

QQQH's average daily trading volume is moderate, which could impact the ease of entering and exiting large positions.

Bid-Ask Spread

The bid-ask spread can vary depending on market conditions but is generally tight, reflecting reasonable liquidity.

Market Environment Factors

Economic growth, interest rate policies, and the overall health of the technology sector significantly impact the Innovator Hedged Nasdaq-100 ETF.

Growth Trajectory

The growth trajectory depends on the sustained growth of the Nasdaq-100, investor demand for downside protection, and Innovator's ability to manage the hedging strategy effectively.

Competitive Edge

QQQH's competitive edge lies in its defined outcome approach, which provides a known level of downside protection while still participating in the potential upside of the Nasdaq-100. This combination is appealing to risk-averse investors seeking exposure to technology stocks. The ETF's clear and transparent hedging mechanism and the issuer's expertise in structured products also contribute to its competitive advantage. It offers a specific risk-reward profile, catering to investors seeking a balance between growth and capital preservation.

Volatility

QQQH aims to reduce volatility compared to the unhedged Nasdaq-100, but its volatility will still be influenced by the underlying index and the options strategy.

Market Risk

The primary market risk is the performance of the Nasdaq-100. The hedging strategy mitigates downside risk, but the ETF will still be affected by overall market conditions and technology sector performance.

Ideal Investor Profile

The ideal investor for QQQH is a risk-averse investor who wants exposure to the Nasdaq-100 but is concerned about potential market downturns.

Market Risk

QQQH is most suitable for long-term investors who prioritize capital preservation and are willing to give up some upside potential in exchange for downside protection.

Innovator Hedged Nasdaq-100 ETF (QQQH) is a defined outcome ETF designed to track the Nasdaq-100 Index while offering a hedge against market declines. It uses options contracts to provide downside protection, making it appealing to risk-averse investors seeking exposure to the technology sector. While it offers downside mitigation, it may also limit upside potential. Investors should carefully consider its defined outcome strategy, expense ratio, and liquidity before investing. The ETF aims to provide a balance between participation in market gains and protection against market losses.

Data Sources:

• Innovator Capital Management website
• ETF.com
• Morningstar

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Consult with a financial advisor before making any investment decisions.