(IOCT) Innovator s Trust - - Ratings and Ratios

The Innovator International Developed Power Buffer ETF - July (NYSE ARCA: IOCT) is a defined outcome ETF designed to provide investors with exposure to international developed markets while incorporating a buffer against potential losses. The fund primarily invests in FLEX Options, which are customizable exchange-traded options contracts that reference the iShares MSCI EAFE ETF. These options allow the fund to seek returns tied to the performance of the MSCI EAFE Index, while also aiming to limit downside exposure. The fund invests at least 80% of its net assets in these FLEX Options, which are guaranteed for settlement by the Options Clearing Corporation (OCC). However, like all financial instruments, FLEX Options carry risks, including counterparty risk with the OCC and potentially lower liquidity compared to traditional exchange-traded options. The fund is classified as non-diversified, meaning it may concentrate its investments in a smaller number of securities, which can increase volatility.

As a buffer ETF, IOCT is structured to provide a specific outcome over a defined period, typically one year. The Power Buffer aspect of the fund means it seeks to combine a downside buffer with the potential for enhanced returns. This is achieved through the use of FLEX Options, which are tailored to meet the funds investment objectives. The funds strategy is designed for investors seeking international equity exposure with a risk management component, particularly during periods of market uncertainty. The iShares MSCI EAFE ETF, which the fund references, tracks the performance of equities in developed markets outside the U.S. and Canada, providing diversification across regions such as Europe, Asia, and Australia.

From a structural perspective, the fund operates with a defined outcome period that resets annually. During this period, the fund seeks to provide a buffer against the first 9-15% of losses for the referenced index, while also offering the potential for growth up to a predetermined cap. This structure makes it appealing to investors who want to participate in international markets but are wary of significant downside risk. The funds use of FLEX Options allows for precise customization of the terms, including strike prices and expiration dates, to align with its stated objectives. However, the complexity of these instruments and the funds reliance on derivatives mean that it may not be suitable for all investors, particularly those without a solid understanding of options strategies.