Odds & Ends: Innovator Debuts New Kind of Buffer ETFs
Innovator ETFs kicked off the week with the launch of four new defined outcome exchange-traded funds that offer both the buffered exposure typically provided by such funds and high rates of income through option premiums. A common criticism of the defined outcome concept is that they have not offered income.
The new ETFs and their preexpenses distribution rates include the following:
Innovator Premium Income 10 Barrier ETF – April (APRD), 6.3%
Innovator Premium Income 20 Barrier ETF – April (APRH), 7.32%
Innovator Premium Income 30 Barrier ETF – April (APRJ), 8.73%
Innovator Premium Income 40 Barrier ETF – April (APRQ), 10.11%
The funds come with expense ratios of 0.79% and list on Cboe Global Markets.
“In our ongoing conversations with our clients, it has become clear to us that there is a substantial demand for an income-focused ETF that will help investors mitigate risk,” said Innovator ETFs CEO Bruce Bond in a press release.
The prospectus notes that the funds will seek to provide the price return of the S&P 500 Index as well as the income offered by U.S. Treasuries. The funds will offer quarterly distributions that will be announced at the start of each outcome period.
Each fund offers a downside “barrier” that the fund document states is not guaranteed but that is reset at the start of each new outcome period. Those barriers range from 10% to 40%, and the fund prospectuses say the products are “not expected” to see losses within an outcome period if the downside protection barrier is not breached. There also are no upside caps to performance.
The portfolios for the funds include U.S. Treasuries and flexible exchange options on the S&P 500 index.
On Tuesday, Teucrium launched another long-short commodity futures ETF. The Teucrium AiLA Long/Short Base Metals Strategy ETF (OAIB) tracks the AiLA-S022 Market Neutral Absolute Return Index. The actively managed fund takes long or short positions in futures on aluminum, copper, lead, zinc, nickel and tin, with decisions made using a five-step methodology that considers a wide range of inputs. The fund has an expense ratio of 1.49% and lists on the NYSE Arca.
And on Friday, VanEck rolled out the VanEck Robotics ETF (IBOT), which tracks an index of companies that generate at least half of their revenue from activities in the robotics space. The top holdings in the 64-stock index include Nvidia Corp. (7.38%), Keyence Corp. (5.49%) and Siemens AG (5.01%). The fund has an expense ratio of 0.47% and lists on the Nasdaq stock market.
Closures
Direxion, which has already closed several funds this year, will be shuttering another eight funds as of the market close on April 21. The affected funds are as follows:
Expense Ratio Changes
A significant number of expense ratio changes took place during the past week.
Effective March 31, the following funds made changes to their expense ratios:
ALPS Equal Sector Weight ETF (EQL), from 0.27% to 0.26%
RiverFront Dynamic Core Income ETF (RFCI), from 0.51% to 0.53%
ALPS Sector Dividend Dogs ETF (SDOG), from 0.40% to 0.36%
Effective April 3, the following funds made changes to their expense ratios:
Fidelity Limited Term Bond ETF (FLTB), from 0.36% to 0.25%
Hull Tactical US ETF (HTUS), from 1.00% to 0.95%
ETC 6 Meridian Mega Cap Equity ETF (SIXA), from 0.82% to 0.80%
ETC 6 Meridian Hedged Equity-Index Option Strategy ETF (SIXH), from 0.87% to 0.82%
ETC 6 Meridian Low Beta Equity Strategy ETF (SIXL), from 0.82% to 0.80%
ETC 6 Meridian Small Cap Equity ETF (SIXS), from 1.00% to 0.89%
Saba Closed-End Funds ETF (CEFS), from 2.90% to 2.42%
Akros Monthly Payout ETF (MPAY), from 0.59% to 0.57%
Corbett Road Tactical Opportunity ETF (OPPX), from 0.75% to 0.78%
Global X SuperIncome Preferred ETF (SPFF), from 0.58% to 0.48%
Other Changes to Existing ETFs
There are also several name and ticker changes to existing ETFs of note.
On April 3, the Sound Enhanced Fixed Income ETF (SDEF) adopted FXED as its ticker, while the ticker for the Sound Equity Income ETF (SDEI) changed to DIVY. Meanwhile, the name of the Innovator Loup Frontier Tech ETF (LOUP) changed to the Innovator Deepwater Frontier Tech ETF.
On the same day, the index for the Global X SuperIncome Preferred ETF (SPFF) changed from the S&P Enhanced Yield North American Preferred Stock Index to the Global X U.S. High Yield Preferred Index.
As of April 10, the iShares MSCI Peru ETF (EPU) will change its name to the iShares MSCI Peru and Global Exposure ETF, and as of June 1, the iShares MSCI Frontier and Select EM ETF (FM) will change its name to the iShares Frontier and Select EM ETF.
Contact Heather Bell at heather.bell@etf.com
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