New Innovator Buffer ETF Offers 100% Downside Protection

Mallika Mitra

Wed, May 14, 2025, 3:15 PM 2 min read

Innovator Capital Management is expanding its footprint successful the buffer ETF abstraction with the Innovator Equity Managed 100 Buffer ETF (BFRZ), the steadfast announced Tuesday.

The exchange-traded money seeks to supply investors with 100% downside extortion earlier fees and expenses via a one-year laddered options portfolio.

Its strategy entails investing successful the Solactive GBS United States 500 Index, which tracks the show of the largest 500 companies successful the U.S. banal market, past purchasing enactment enactment contracts with laddered expiration dates that are 3 months isolated up to a year. BFRZ past sells short-dated telephone enactment contracts with expiration dates of astir 2 weeks successful an effort to money the purchases of the enactment enactment contracts.

It’s actively managed by Parametric with an disbursal ratio of 0.89%.

We’ve seen a surge successful “risk management” arsenic investors determination wealth into wealth marketplace funds, Graham Day, main concern serviceman astatine Innovator, told etf.com. But BFRZ “is a amended risk-off solution for advisors” for 2 reasons, helium added.

“First, erstwhile you necktie your upside to the equity markets, you person much upside imaginable than what bonds offer,” Day said. “Second is the taxation status.”

He added that portion investors whitethorn look astatine a wealth marketplace money and get 4% returns, that could really conscionable beryllium 2.4% aft taxes. “For each of our 100 buffer ETFs, including BFRZ, we don't expect paying immoderate superior gains distribution.”

Investors that are putting wealth into vehicles similar short-term and ultra-short-term enslaved funds and wealth marketplace funds often deliberation those vehicles don’t travel with a batch of risk, but that’s not ever the case, Day said. (He pointed to immoderate of those funds that were down 5% to 7% successful 2022 arsenic an example).

The extremity of this caller offering is to springiness investors a akin acquisition arsenic the information they consciousness with enslaved funds but with built-in extortion and immoderate of the equity upside vulnerability that the steadfast thinks will, implicit time, outperform bonds, Day said. “[The fund] gives them that aforesaid comfortableness of the downside extortion successful a much tax-advantaged nature.”

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