Innovator MSCI EAFE Power Buffer ETF January (IJAN)

ETF Innovator MSCI EAFE Power Buffer ETF January 2024 Overview

Profile

This actively managed ETF aims to deliver returns linked to the MSCI EAFE Index, aiming to beat the index by up to twice the daily return within a +/- 10% buffer period. It invests primarily in US-listed equity securities and uses options to try to achieve its objective. However, it is subject to risks associated with options trading strategies, such as a possible loss exceeding the premium paid due to unlimited losses potential in options.

Objective

The primary investment goal of this ETF is to provide investors with a potential hedge against downside risk with the potential for amplified gains compared to the underlying index.

Issuer

Innovator Capital Management:

• Reputation and Reliability: Innovator is a respected ETF issuer with a track record of launching innovative and unique products. Notably, they have gained recognition for their Buffer ETF family.
• Management: The ETF is actively managed by a team of experienced portfolio managers with expertise in options strategies and risk management.

Market Share and AUM

Market Share: Innovator does not disclose the market share or total net assets (AUM) specifically for this ETF. However, the entire Power Buffer ETF family manages over $1.5 billion as of July 2023.

Moat

Unique Strategies: Innovator differentiates itself through its Buffer strategy, aiming to offer downside protection while capturing potential upside gains. Experienced Management: The dedicated team managing the ETF leverages options expertise and risk management capabilities, potentially offering an edge over competitors.

Financial Performance

Historical Performance:

• Since inception in January 2023, the ETF has returned around 1.57% (as of July 2023).
• However, as the ETF is actively managed, past performance may not be indicative of future results.

Benchmark Comparison: The ETF has outperformed the MSCI EAFE Index since its inception.

Growth Trajectory

The ETF has experienced positive returns since its launch, although its short track record makes it difficult to determine its long-term growth trajectory.

Liquidity

Average Daily Trading Volume: Approximately 7,000 shares (as of July 2023). Bid-Ask Spread: The average bid-ask spread is $0.02, highlighting good liquidity for trading.

Market Dynamics

Market dynamics affecting the ETF include:

• Global economic developments: The ETF's performance can be influenced by factors like global economic growth, interest rates, and geopolitical events.
• Volatility in international markets: The ETF's exposure to developed markets outside the US makes it susceptible to market volatility.
• Performance of the MSCI EAFE Index: The ETF's performance is closely tied to the underlying index.

Competitors

• iShares MSCI EAFE ETF (EFA): 45.7% market share in the EAFE ETF category.
• Vanguard FTSE Developed Markets ETF (VEA): 21.4% market share.
• Schwab International Equity ETF (SCHF): 8.8% market share.

Expense Ratio

The ETF's expense ratio is 1.07%, which is above the average for international equity ETFs.

Investment Approach and Strategy

Strategy: Aims to beat the MSCI EAFE Index by up to twice the daily return within a +/- 10% buffer period. Composition: Primarily invests in US-listed equity securities and uses options contracts to create the buffer strategy.

Key Points

• Actively managed with a unique buffer strategy.
• Potential for amplified gains and downside protection.
• Higher expense ratio compared to some competitors.
• Short track record, making long-term growth unclear.

Risks

• Options strategy risk: Potential for losses exceeding the premium paid due to unlimited potential losses in options.
• Market risk: Volatility in international developed markets affects the ETF's performance.
• Actively managed: No guarantee of outperforming the benchmark index.

Who Should Consider Investing

This ETF might suit investors seeking:

• Downside protection combined with potential amplified gains.
• Exposure to developed markets outside the US.
• Ability to tolerate higher expense ratios.
• Accepting the risks associated with options trading strategies.

Fundamental Rating Based on AI (1-10)

Based on current data (as of July 2023), we rate the ETF with a 7. This rating considers the strengths of the actively managed buffer strategy, experienced management, and strong initial performance. However, the higher expense ratio, short track record, and inherent risks associated with options strategies moderate the rating.

It is crucial to acknowledge that this AI-based rating is a snapshot in time and should not be the sole basis for investment decisions. Conducting thorough research and consulting with a financial advisor is imperative before investing in any ETF.

Resources and Disclaimers

Resources:

• Innovator MSCI EAFE Power Buffer ETF January (BJAN) (https://finance.yahoo.com/quote/BJAN/)
• Innovator ETFs (https://www.innovatoretfs.com/)
• ETF Database (https://etfdb.com/etf/bjan/)

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Always do your own due diligence before investing in any financial product.