What is the FEUS ETF ?
FEUS ETF: Overview
The FEUS ETF is an exchange-traded fund that aims to provide investors with exposure to a selection of companies exhibiting certain environmental, social, and governance (ESG) characteristics. The fund also seeks to offer broad-market, core exposure to publicly-traded U.S. large capitalization equity securities. The FEUS ETF is designed to track the performance of the Underlying Index, which comprises the 600 largest companies in the Northern Trust 1250 IndexSM, as measured by largest float-adjusted market capitalization.
FEUS ETF Underlying and Exposure: What Does It Track and How?
The Underlying Index, which the FEUS ETF seeks to replicate, follows a unique methodology to ensure it reflects specific ESG characteristics while minimizing tracking differences relative to the Starting Universe. The Index Provider applies an ESG Vector Score to each company within the Starting Universe, ranking them based on their management of and exposure to material ESG metrics. These metrics are defined by the Sustainability Accounting Standards Board (SASB) Standards and include environmental, social capital, human capital, business model and innovation, and leadership and governance factors. The ESG Vector Score is generated by adjusting the preliminary ESG score based on a quantitative assessment of how a company is managing ESG risks relative to its peers. Furthermore, a distinct corporate governance score is applied to each company to evaluate its board and management quality, board structure, ownership and shareholder rights, remuneration, financial reporting, and stakeholder governance. To enhance the ESG characteristics and reduce climate-related risk, the Index Provider uses data from Institutional Shareholder Services ESG Solutions to assess carbon emissions intensity, carbon reserves, and a carbon risk rating for each company. The optimization process during reconstitution aims to select and weight securities to achieve specific objectives, such as increasing the aggregate ESG Vector Score and reducing carbon emissions intensity and carbon reserves.
FEUS overlap What is the FEUS ETF ?
FEUS ETF: Benefits to Invest in this ETF
The FEUS ETF offers several advantages to investors seeking exposure to socially responsible and environmentally conscious companies. By tracking an index that prioritizes ESG characteristics and carbon-related risk reduction, investors can align their portfolios with companies that demonstrate positive contributions to sustainable practices. Additionally, the ETF provides broad-market exposure to U.S. large capitalization equities, potentially offering diversification benefits.
FEUS ETF: Considerations Before Investing
While the FEUS ETF may appeal to socially conscious investors and those seeking exposure to U.S. large-cap equities, it is essential to consider some factors before investing. As with any investment, there are risks involved, and the performance of the ETF is subject to market fluctuations. Moreover, potential investors should assess their risk tolerance, investment goals, and time horizon before committing capital to the FEUS ETF.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute investment advice. The author is not providing any investment advisory services. Investors should conduct their due diligence and seek professional advice before making investment decisions.
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FAQ
What is the FEUS ETF?
The FEUS ETF, also known as the Innovator Nasdaq-100 Power Buffer ETF, is an exchange-traded fund that provides investors with exposure to the performance of the Invesco QQQ Trust, Series 1 (the "Underlying ETF"), which tracks the NASDAQ-100 Index.
How does the FEUS ETF work?
The FEUS ETF primarily invests in a portfolio of Flexible Exchange (FLEX) Options that reference the Underlying ETF. These FLEX Options are customizable and offer the potential for returns based on the performance of the Underlying ETF over an approximately one-year Outcome Period.
What are the "Outcomes" sought by the FEUS ETF?
The FEUS ETF aims to provide investors with returns that are three times the increase in the Underlying ETF's share price over the Outcome Period, subject to a Cap. If the Underlying ETF's share price decreases, the Fund seeks to provide returns that match the decline, and shareholders bear all losses on a one-to-one basis.
What is the Cap in the FEUS ETF?
The Cap represents the maximum percentage return an investor can achieve from an investment in the FEUS ETF over the Outcome Period. For the current Outcome Period, the Cap is set at 29.07%, and after taking into account the Fund's management fee, it is reduced to 28.28%.
How does the FEUS ETF use FLEX Options to achieve its goals?
The Fund uses FLEX Options to create layers within its portfolio. These FLEX Options are designed to expire on the last day of the Outcome Period and are selected with specific strike prices to align with the desired Outcomes based on the performance of the Underlying ETF's share price.