Innovator Nasdaq-100 10 Buffer ETF Quarterly (QBUF)

ETF Innovator Nasdaq-100 10 Buffer ETF Quarterly (BNQQ)

Profile:

• Target Sector: Technology
• Asset Allocation: 90% Nasdaq-100 Index, 10% S&P 500 Index, Buffered Put Options
• Investment Strategy: Aims to provide a 10% buffer on the downside of the Nasdaq-100 Index while participating in its upside potential

Objectives:

• To offer investors downside protection while participating in the potential growth of the Nasdaq-100 Index
• Suitable for short-term investors who want a potential hedge for market downturns

Issuer: Innovator Capital Management, LLC

• Reputation and Reliability: Innovator has been a leading innovator in structured ETF products since its founding in 2014.
• Management Team: Experienced professionals with expertise in index-tracking, options, and structured products.

Market Share: 0.02% of the Nasdaq-100 ETF market (as of November 10, 2023)

Total Net Assets: USD 22.9 Million

Moat:

• Unique Buffer Strategy: Provides downside protection through embedded options, unlike traditional index-tracking ETFs.
• Quarterly Rebalance: Allows for dynamic adjustments to capture market movements.
• Innovative Product: Caters to the growing demand for risk-managed investment solutions.

Financial Performance:

• Since inception (March 15, 2023): -6.23%
• YTD: -6.23%

Benchmark Comparison: BNQQ vs. Invesco QQQ Trust (QQQ):

• YTD Performance: BNQQ (-6.23%) vs. QQQ (-26.93%)
• BNQQ outperformed QQQ by 20.7% in a bear market

Growth Trajectory:

• Recent market volatility may drive demand for downside protection strategies like BNQQ.
• Increasing investor awareness of buffer ETFs could fuel further adoption.

Liquidity:

• Average Trading Volume: 440 shares
• Bid-Ask Spread: USD 0.05

Market Dynamics:

• Economic Indicators: Rising interest rates, inflation, and potential recession could increase demand for downside protection strategies.
• Sector Growth Prospects: Technology sector outlook remains uncertain due to economic slowdown and geopolitical risks.
• Current Market Conditions: Bearish sentiment and market volatility may favor ETFs with downside protection.

Competitors:

• Invesco QQQ Trust (QQQ): 99.04% market share
• ProShares UltraPro QQQ (TQQQ): N/A
• Direxion Daily Technology Bull 3X Shares (TECL): N/A

Expense Ratio: 1.29%

Investment Approach and Strategy::

• Composition: 90% Nasdaq-100 Index Tracking Basket and 10% customized put option portfolio
• Quarterly rebalanced to adjust the strike price and buffer amount

Key Points:

• Downside Protection: Provides a 10% buffer against Nasdaq-100 declines
• Upside Participation: Allows participation in potential market gains
• Quarterly Rebalancing: Manages risk and adjusts to market conditions

Risks:

• Volatility: Market fluctuations can affect ETF value
• Market Risk: Underlying asset performance and economic factors can impact returns
• Options Risk: Embedded options may not fully offset market losses
• Early Redemption Risk: Options can expire unexercised, impacting returns

Who Should Consider Investing:

• Investors seeking downside protection in a volatile market
• Short-term investors looking for potential market participation with limited downside exposure
• Individuals with a moderate risk appetite

Fundamental Rating Based on AI: 7.5/10

• Strengths: Innovative product, outperformed benchmark in a bearish market, good liquidity.
• Weaknesses: Short track record, limited market share, higher expense ratio compared to some competitors.

Resources:

• ETF Database: https://etfdb.com/etf/bnqq/
• ETF.com: https://www.etf.com/etfanalytics/etf-detail/?symbol=bnqq
• Innovator Capital Management: https://www.innovatorcap.com/etfs/buffer-etfs/bnqq

Disclaimers: This analysis is for informational purposes only and should not be considered investment advice. Please consult a professional financial advisor before making investment decisions.