Innovator ETFs Trust - Innovator International Developed Power Buffer ETF - July (IOCT)

ETF Innovator ETFs Trust - Innovator International Developed Power Buffer ETF - July (PID)

Profile:

PID is an actively managed exchange-traded fund (ETF) listed on the Cboe BZX exchange. Launched in July 2020, it seeks to provide leveraged exposure with a buffer to downside risk for the S&P International Developed Markets LargeMidCap Index. The ETF uses a buffered outcome strategy and invests in swaps and futures contracts on the index. PID is rebalanced and reset quarterly.

Objective:

The primary objective of PID is to provide investors with the opportunity to achieve a positive absolute return with a buffer against potential losses in the underlying index. It aims to deliver a return of 150% of the performance of the index, with a maximum potential loss capped at 15% during the quarterly period.

Issuer:

PID is issued by Innovator Capital Management, LLC, an ETF issuer specializing in actively managed, rules-based, and unique investment products.

• Reputation and Reliability: Innovator Capital Management has a solid reputation and track record in the ETF industry, with over $13 billion in assets under management.
• Management: The firm has a team of experienced portfolio managers and strategists who manage the PID ETF.

Market Share:

PID currently holds a small market share within the leveraged and inverse ETF space, focusing on international developed markets.

Total Net Assets:

As of October 26, 2023, PID has approximately $78 million in total net assets.

Moat:

PID's competitive advantage lies in its unique leveraged and buffered outcome strategy. This strategy offers investors the potential for magnified gains while providing a cushion against significant losses in the underlying index.

Financial Performance:

Since its inception, PID has delivered positive returns. However, its performance can vary depending on market conditions and the rebalancing period. It is crucial to analyze the ETF's historical performance and compare it to its benchmark index for a thorough understanding.

Benchmark Comparison:

Although PID aims to deliver 150% of the S&P International Developed Markets LargeMidCap Index performance, its actual performance may differ due to fees and tracking error.

Growth Trajectory:

The growth trajectory of PID is dependent on market conditions, investor demand for leveraged and buffered exposure, and the performance of the underlying index.

Liquidity:

• Average Trading Volume: PID has an average daily trading volume of approximately 2,500 shares.
• Bid-Ask Spread: The bid-ask spread is typically narrow, indicating reasonable liquidity.

Market Dynamics:

Factors such as global economic growth, interest rate fluctuations, and geopolitical events can influence the performance of PID and the broader international developed markets.

Competitors:

Key competitors in the leveraged and inverse international developed markets ETF space include:

• VelocityShares Daily 1.5x Long International Developed Markets Index (IID)
• Direxion Daily MSCI International Developed Markets Bull 2X Shares (DXI)
• ProShares Ultra MSCI EAFE (ULE)

Expense Ratio:

The expense ratio for PID is 0.95%, which is considered average for actively managed leveraged and inverse ETFs.

Investment Approach and Strategy:

• Strategy: PID aims to achieve its objective through a leveraged and buffered outcome strategy. It utilizes swap agreements and futures contracts to generate returns linked to the S&P International Developed Markets LargeMidCap Index.
• Composition: The ETF primarily invests in derivatives contracts linked to the index instead of holding the underlying stocks directly.

Key Points:

• Provides leveraged exposure to the S&P International Developed Markets LargeMidCap Index with a buffer against potential losses.
• Aims to deliver a return of 150% of the index performance with a maximum potential loss of 15% per quarter.
• Actively managed by Innovator Capital Management.
• Has a moderate expense ratio for a leveraged and inverse ETF.

Risks:

• Volatility: PID is a leveraged ETF and is inherently more volatile than its underlying index.
• Market Risk: The ETF is subject to risks associated with the international developed markets, including economic downturns, political instability, and currency fluctuations.
• Tracking Error: The ETF's performance may deviate from its target benchmark due to fees and management strategies.

Who Should Consider Investing:

PID is suitable for investors seeking leveraged exposure to the international developed markets with a buffer against downside risk. It may appeal to investors with a higher risk tolerance and a short-term investment horizon. However, investors should carefully consider their investment goals, risk tolerance, and understanding of leveraged and inverse investment strategies before investing in PID.

Fundamental Rating Based on AI:

Based on AI analysis of the factors mentioned above, PID receives a fundamental rating of 7.5 out of 10. This rating reflects its unique strategy, experienced management team, and moderate expense ratio. However, the ETF's relatively small market share, short track record, and inherent volatility warrant further consideration.

Resources and Disclaimers:

• Innovator Capital Management website: https://www.innovatoretfs.com/
• ETF Database: https://etfdb.com/etfs/pid/
• Morningstar: https://www.morningstar.com/etfs/arcx/pid/quote

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. It is essential to conduct thorough research and consult with a qualified financial professional before making any investment decisions.