Chicago-based Innovator Capital Management said Monday that it's expanding the Innovator Accelerated ETFs suite. New products will be rolled out in early 2022 and will be part of Innovator's Defined Outcome ETF series, which now includes over 75 funds and $5.3 billion in assets.
ThinkAdvisor recently recognized Innovator Capital for excellence in Thought Leadership in its inaugural LUMINARIES program. Also winning one of the 2021 LUMANARIES award was its co-founder and CEO Bruce Bond, who started the company in 2014 with John Suthard, and was honored for Executive Leadership. Bond and Suthard founded PowerShares in 2003 and then sold it to Invesco in 2006.
Bond took some time off from his busy schedule to answer a few broad questions about his work and off-the-clock life. Here are the highlights:
1. What market indicator, industry statistic, regulatory change or advisor trend are you watching most closely right now and why?
There are probably two indicators we are watching closely right now: inflation and potential tax hikes. Mainly because those are two factors that can really impact wealth negatively.
Those seeking meaningful portfolio growth are now faced with increased risks, and those seeking protection and income (e.g., retirees) are struggling to find either in the bond markets. While market volatility can hurt a portfolio, inflation and taxes can sap portfolio value (and retirement longevity) much faster and, I think, are risks that must be addressed.
2. How has this figure been changing recently (2021), and how do you expect it to change (2022)?
We used to wonder when inflation might hit. We no longer have to wonder. It's here. Today, it's more a question of what we do with it. Historically, the answer has been TIPS or other assets that have performed well with inflation.
But today's low-rate environment has made those types of portfolio moves more difficult. For example, it may sound simple, but a 10% portfolio allocation to TIPS will only cover 10% of your portfolio from inflation! That's not nearly good enough. While we don't know the future, we don't see inflation going away anytime soon.
3. What would you suggest advisors do now or consider doing in the future about it?
We believe today's investors must stay in the stock market but do so in a less risky way. This was a big reason for building the Innovator Defined Outcome ETFs.
Inflation ultimately moves through the stock market positively but with bouts of volatility. Buffer ETFs allow you to invest in the stock market but with a built-in buffer against downside loss.
Another, more technical note is that with these ETFs, volatility can actually be beneficial. The higher the market volatility when the ETFs' options positions are entered into, the higher the upside potential. In our view, this market environment is excellent for these types of products.
4. Who or what critical source of information do you track, or follow online, to keep up with this or other trends?
For us, our information sources mainly come from raw data, and then we have good people and partners help analyze and act on that data. So you can probably guess the typical culprits: Bloomberg, Federal Reserve Economic Database (FRED), realized and implied volatility data, skew, and interest rates, to name a few.
5. Are you changing any of your work habits at this stage of the pandemic?
We consider our people and investment products to be part of the stabilization of the economy and the financial health of our investors, as well as value-adds to the advisors who allocate client money our way.
