Have you heard the news? Innovator, the outcome-based ETF issuer, has launched a suite of barrier ETFs that will make you feel safer than a cat in a house full of mice. According to Graham Day, the firm’s CIO, advisors are finally waking up to the fact that bonds are not the safe haven they were once thought to be. Finally, the truth has been revealed!
The best part is that if you pair one of these barrier ETFs with fixed income, you’ll get all sorts of diversification benefits. It’s like ordering a pizza with extra toppings – you get more bang for your buck.
Innovator launched these products last week with some clever names: Premium Income 10 Barrier ETF, Premium Income 20 Barrier ETF, Premium Income 30 Barrier ETF, and Premium Income 40 Barrier ETF. It’s like they’re naming a fancy hotel room service menu for investors.
Graham Day claims that these ETFs remove credit risk while providing daily liquidity. As someone who has had a credit card declined at a restaurant, I would love to remove all credit risk in my life.
The barrier ETFs protect against losses up to 10%, 20%, 30%, and 40%, which is pretty impressive. And they also provide income distribution rates at around 9%, 8%, 6%, and 5% – respectively, of course. It’s like getting paid to not lose money.
But be warned, the more protection you get, the less income you’ll receive. It’s like going to an all-you-can-eat buffet and trying to get healthy options – you can’t have your cake and eat it too.
If things go south and the fund’s underlying assets experience losses beyond its performance level, never fear! You’ll still receive quarterly distribution payments. These payments are based on the premiums of the sold options.
Innovator data on defined outcome ETF industry growth shows that barrier and buffer ETFs have increased from three in August 2018 to 158 in March 2023, with assets under management rising from $100,000 to about $21 billion. That’s a lot of moolah.
But let’s be real, investing is like playing a game of Jenga – it’s all fun and games until the tower comes crashing down. So, maybe don’t put all your eggs in one basket and diversify your investments. And if you need extra protection, try wrapping yourself in bubble wrap – it’s much cheaper.
Serious News: cnbc
