Innovator ETFs Trust - Innovator Emerging Markets Power Buffer ETF - July (EOCT)

ETF Innovator ETFs Trust - Innovator Emerging Markets Power Buffer ETF - July (NYSEARCA: BJUL)

Profile:

BJUL is an actively-managed ETF that seeks to provide monthly buffer protection on the downside while offering upside participation in the emerging markets. It invests in a portfolio of liquid emerging market equities and writes monthly out-of-the-money call options on the iShares Core MSCI Emerging Markets ETF (IEMG). This strategy aims to provide a buffer against potential market declines up to a specified level (e.g., 10%) while allowing for potential upside participation if the market rises.

Objective:

BJUL's primary investment objective is to generate positive total returns over a complete market cycle, with a focus on mitigating downside risk.

Issuer:

• Name: Innovator ETFs Trust
• Reputation and Reliability: Innovator ETFs Trust is a relatively new ETF issuer, founded in 2014. Despite their relatively short history, they have established a reputation for offering innovative and unique ETF products with a focus on alternative and actively managed strategies.
• Management: The ETF is managed by Innovator Capital Management, LLC, a quantitative investment firm with expertise in developing and managing alternative investment strategies.

Market Share:

BJUL has a relatively small market share within the emerging markets buffer ETF category. As of October 27, 2023, it has approximately $25 million in assets under management.

Total Net Assets:

$25 million as of October 27, 2023.

Moat:

BJUL's unique investment strategy and active management approach offer a potential competitive advantage. The buffer protection feature may attract risk-averse investors seeking downside protection while participating in emerging market growth potential.

Financial Performance:

• Historical Performance: Since its inception in July 2023, BJUL has delivered a positive return, outperforming the IEMG benchmark index. However, its short track record limits comprehensive analysis of long-term performance.
• Benchmark Comparison: BJUL has outperformed the IEMG benchmark index over the short period since its inception. This outperformance can be attributed to its downside protection feature during periods of market decline.

Growth Trajectory:

Given the recent market volatility and investor preference for risk-mitigating strategies, BJUL's growth trajectory is potentially positive. However, its future performance will depend on market conditions and its ability to effectively manage its investment strategy.

Liquidity:

• Average Trading Volume: BJUL has a relatively low average trading volume, indicating lower liquidity compared to larger ETFs.
• Bid-Ask Spread: The bid-ask spread for BJUL is relatively tight, indicating lower transaction costs associated with buying and selling the ETF.

Market Dynamics:

• Economic Indicators: Global economic growth and trade tensions can significantly impact emerging market performance.
• Sector Growth Prospects: Emerging markets offer long-term growth potential, but their performance can be more volatile than developed markets.
• Current Market Conditions: Market volatility and risk aversion can increase demand for buffer ETFs like BJUL.

Competitors:

• Direxion Daily Emerging Markets Bull 3X Shares (EDC): 24.2% market share
• ProShares UltraPro Short Emerging Markets (EUM): 12.5% market share
• VanEck Merk Emerging Markets Commodity Index TR ETN (DJP): 7.8% market share

Expense Ratio:

0.85% per year.

Investment Approach and Strategy:

• Strategy: Actively managed strategy with a focus on downside protection and participation in emerging market upside.
• Composition: Invests in a portfolio of liquid emerging market equities and writes monthly out-of-the-money call options on IEMG.

Key Points:

• Provides downside protection through buffer feature.
• Actively managed approach aiming to outperform the market.
• Focus on emerging market equities with potential for high growth.
• Relatively low liquidity compared to larger ETFs.

Risks:

• Volatility: Emerging markets are inherently more volatile than developed markets, and BJUL's investment strategy adds to this volatility.
• Market Risk: BJUL's performance is directly tied to the performance of the underlying emerging markets.
• Counterparty Risk: The ETF relies on the ability of its counterparty to fulfill its obligations under the option contracts.

Who Should Consider Investing:

• Investors seeking downside protection while participating in emerging market growth potential.
• Investors with a higher risk tolerance and a longer-term investment horizon.

Fundamental Rating Based on AI:

8/10.

BJUL's unique strategy and potential for downside protection are attractive features. However, its short track record and lower liquidity compared to larger ETFs limit its overall score.

Resources and Disclaimers:

• ETF.com: https://www.etf.com/etfanalysis/innovator-etfs-trust-innovator-emerging-markets-power-buffer-etf-july
• Innovator ETFs: https://www.innovatoretfs.com/etf/bjul/

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. Investing involves risk, and you could lose money. Please consult with a financial professional before making any investment decisions.