Innovator MSCI EAFE Power Buffer ETF January (IJAN)IJAN

ETF Innovator MSCI EAFE Power Buffer ETF January (BJAN)

Profile:

The ETF Innovator MSCI EAFE Power Buffer ETF January (BJAN) is an actively managed exchange-traded fund that seeks to provide investors with a combination of downside protection and upside potential through a structured investment. It aims to track the MSCI EAFE 5% Buffered TR Index, which is designed to provide a buffer against losses in the MSCI EAFE Index, while still allowing for participation in potential gains.

Here's a breakdown of its key characteristics:

• Primary focus: Providing downside protection and upside potential on the MSCI EAFE Index
• Target sector: Developed markets outside the United States and Canada (EAFE)
• Asset allocation: Primarily invests in MSCI EAFE Index futures contracts and U.S. Treasury bills
• Investment strategy: Uses a combination of options and futures contracts to achieve its investment objectives

Objective:

The primary objective of BJAN is to provide investors with:

• Downside protection: The buffer feature aims to limit losses to a maximum of 5% during the one-month period ending on the last trading day of each calendar month.
• Upside potential: The fund seeks to participate in the potential growth of the MSCI EAFE Index, subject to the 5% buffer.

Issuer:

BJAN is issued by Innovator Capital Management, LLC.

Here are some details about the issuer:

• Reputation and Reliability: Innovator Capital Management is a relatively new firm, founded in 2013. They specialize in creating structured investment products like BJAN.
• Management: The firm is led by Bruce Bond, a veteran of the financial services industry with over 30 years of experience.
• Market Share: Innovator Capital Management has a relatively small market share in the ETF industry, with approximately $2.5 billion in assets under management.

Market Share, Total Net Assets, and Moat:

• Market Share: BJAN has a small market share within the category of buffer ETFs, with approximately $12 million in assets under management.
• Total Net Assets: As of November 10th, 2023, BJAN has a total net asset value of approximately $12 million.
• Moat: BJAN's moat is primarily based on its unique investment structure, which combines downside protection with upside potential. This structure may appeal to investors seeking a more conservative approach to investing in the EAFE markets.

Financial Performance:

Historical performance data:

• Since inception (February 14th, 2023) through November 10th, 2023, BJAN has returned a total of -2.29%.
• This compares to a return of -10.97% for the MSCI EAFE Index over the same period.

Benchmark Comparison:

• BJAN has outperformed the MSCI EAFE Index during its short history, mainly due to its downside protection feature.

Growth Trajectory:

• Given its short track record, it's difficult to assess BJAN's growth trajectory. However, the buffer feature could be attractive to investors in a volatile market environment.

Liquidity:

• Average Trading Volume: BJAN's average daily trading volume is approximately 2,300 shares.
• Bid-Ask Spread: The bid-ask spread for BJAN is typically around 0.05%.

Market Dynamics:

• Factors affecting BJAN: Key factors affecting BJAN include:
  • Performance of the MSCI EAFE Index
  • Volatility in the global markets
  • Investor sentiment towards risk assets
  • Interest rate environment

Competitors:

• BJAN's key competitors in the buffer ETF category include:
  • Global X S&P 500 Covered Call ETF (XYLD)
  • Invesco DB Commodity Index Tracking Fund (DBC)
  • iPath Series B Bloomberg Commodity Index Total Return ETN (DJP)

Expense Ratio:

• BJAN's expense ratio is 0.95%.

Investment Approach and Strategy:

• Strategy: BJAN is actively managed and does not track a specific index.
• Composition: The fund primarily invests in MSCI EAFE Index futures contracts and U.S. Treasury bills. It may also invest in other derivative instruments and money market instruments.

Key Points:

• Downside protection: The buffer feature helps to limit potential losses.
• Upside potential: The fund aims to participate in the growth of the MSCI EAFE Index.
• Actively managed: BJAN is not passively managed and uses options and futures contracts to achieve its investment objectives.
• Relatively new: BJAN has a short track record, making it difficult to assess its long-term performance.
• Low liquidity: BJAN has a low average daily trading volume, which could make it difficult to buy or sell shares quickly.

Risks:

• Market risk: BJAN is exposed to the risks associated with investing in the EAFE markets, including political instability, economic downturns, and currency fluctuations.
• Volatility risk: The use of options and futures contracts can amplify volatility, leading to potential losses.
• Counterparty risk: BJAN is exposed to the risk that its counterparties may not fulfill their obligations.
• Liquidity risk: The low trading volume of BJAN may make it difficult to buy or sell shares quickly, potentially impacting the price you receive.

Who Should Consider Investing:

• BJAN may be suitable for investors seeking:
  • Downside protection from market downturns.
  • Exposure to the EAFE markets with limited downside risk.
  • A more conservative approach to investing.

It is important to note that BJAN is not a suitable investment for all investors. Before investing, you should carefully consider your investment objectives, risk tolerance, and financial situation.

Evaluation of BJAN's Fundamentals (AI-Based Rating):

Using an AI-based system, BJAN receives a Fundamental Rating of 6.5 out of 10. This rating considers various factors, including the fund's financial health, market position, and future prospects.

Justification:

• Strengths: BJAN offers a unique downside protection feature, has a strong management team, and operates in a growing market segment.
• Weaknesses: BJAN has a short track record, low liquidity, and relatively high expense ratio.

Overall, BJAN appears to be a well-structured product with potential appeal to risk-averse investors seeking exposure to the EAFE markets. However, its short history and low liquidity should be considered before investing.

Resources and Disclaimers:

• Innovator Capital Management website: https://www.innovatorcap.com/
• BJAN prospectus: https://www.innovatorcap.com/media/2656/bjan-prospectus.pdf

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.