The issuer of the DJAN ETF, which is the Innovator Defined Outcome ETF, is PDR Services, LLC (PDR). The ETF employs a target outcome strategy using Flexible Exchange® Options (FLEX Options) linked to the SPDR® S&P 500® ETF Trust as its reference asset. FLEX Options are customized equity or index option contracts that trade on an exchange, providing investors with the flexibility to customize key contract terms. The underlying ETF, SPDR® S&P 500® ETF Trust, follows a replication strategy, aiming to mirror the price and yield performance of the S&P 500® Index. The DJAN ETF offers a unique investment approach, aiming to provide a defined level of protection against losses while also capping potential gains, making it an option for investors seeking specific risk-return profiles.
While the DJAN Dividend ETF primarily emphasizes dividend-focused investments, its dividend distribution strategy is designed to provide consistent income to investors. The ETF typically distributes dividends on a quarterly basis, following a meticulous selection process of dividend-paying stocks. DJAN's eligibility criteria for including stocks in its portfolio require companies to have a history of stable or growing dividends, ensuring a reliable income stream for investors. This dividend distribution approach aims to strike a balance between current income and potential capital appreciation, making DJAN an attractive choice for income-seeking investors.
The DJAN ETF primarily tracks the price performance of the SPDR® S&P 500® ETF Trust (the “Underlying ETF”) using Flexible Exchange® Options (“FLEX Options”). These FLEX Options are customized equity or index option contracts that allow investors to tailor key contract terms. The Underlying ETF aims to replicate the S&P 500® Index, which consists of 500 selected U.S. companies spanning various industry groups. DJAN employs a target outcome strategy over an approximate one-year Target Outcome Period, offering a deep buffer against losses between -5% and -30% of the Underlying ETF, with a cap of 13.85% (after fees and expenses) for the current Target Outcome Period, which began on January 23, 2023, and ends on January 19, 2024. DJAN's cap and buffer may change for each new Target Outcome Period based on prevailing market conditions, making it suitable for investors looking for customized risk-reward profiles within the S&P 500®.
The correlation aspect of the DJAN ETF, which primarily invests in FLEX Options referencing the price performance of the SPDR® S&P 500® ETF Trust (SPY), plays a vital role in understanding its behavior in relation to the broader U.S. equity market. Given its focus on SPY, DJAN is expected to have a high correlation with the S&P 500 Index. This strong correlation makes DJAN a valuable tool for investors seeking to customize their investment outcomes and manage risk. To gain deeper insights into DJAN's correlations and explore its potential benefits, investors can utilize the ETF Insider web app, which provides comprehensive data and visualizations for various U.S. ETFs, facilitating informed decision-making and highlighting market trends and overlaps.
The Defiance Nasdaq 100 Buffer ETF (DJAN) primarily focuses on the technology sector, with a significant portion of its assets invested in Nasdaq 100 companies. This ETF aims to provide investors with exposure to the performance of leading technology companies, making it an attractive choice for those seeking growth opportunities in the tech industry. DJAN also utilizes target outcome strategies, offering a deep buffer against potential losses and a predefined cap on returns, allowing investors to manage risk and return potential effectively.
The exposure characteristics of the Defiance Nasdaq 100 Buffer ETFfocus on a dual investment strategy. Firstly, it invests in dividend-paying U.S. equity securities, predominantly in large-capitalization companies with a history of increasing dividends for ten consecutive years. Additionally, the ETF incorporates a credit spread options strategy on an S&P 500 ETF or Index, providing potential returns through selling out-of-the-money short put options while purchasing protective long put options. This ETF offers exposure to both income-focused equity investments and options strategies, allowing investors to benefit from dividend growth and volatility management in the U.S. equity market.
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