Innovator ETFs Blog: Commentary from Leading Experts

June 29, 2022

Dissecting the Storm Clouds

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Tim Urbanowicz, CFA

Head of Institutional Strategy
Innovator Capital Management

The consumer is the backbone of the economy, with consumer spending accounting for 68.6% of all US GDP. When spending slows, the ramifications are felt across the board. In the face of red-hot inflation and aggressive tightening from the Fed, the US Personal Consumption Expenditures Index — a broad measure of consumer spending — remained strong. In other words, people are still buying goods and services, even at these inflated prices, softening the blow to the broader economy. But can this trend continue? In this month’s commentary, we examine three reasons why we believe a slowdown in spending, and hence a slowdown in growth, is coming, and discuss what this might mean for investors.

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May 25, 2022

The Froth is Coming Off

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Tim Urbanowicz, CFA

Head of Institutional Strategy
Innovator Capital Management

2022 has been a brutal year for risk assets. The Fed’s move towards more restrictive policy has sent speculative parts of the market into an all-out tailspin. Profitless technology stocks are off ~70% from their 2021 highs, SPACs are off 50%, Bitcoin is off 68%, and the retail darling, ARK Innovation ETF is off an additional 40% from Cathie Wood’s “bargain basement” call in February. No doubt a shift in sentiment from the “stocks only go up” mentality of 2020 and 2021.

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May 12, 2022

A Buffer in the Hand

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Tim Urbanowicz, CFA

Head of Institutional Strategy
Innovator Capital Management

Recession fears are rising and after a few soft economic readings, the conversation for many advisors is quickly shifting from “if” to “when”. Defensive equity strategies are raking in the cash on these fears, with low volatility ETFs netting $1.1 billion in April alone. But relying on historical volatility, correlations, or defensive sectors, as many low volatility strategies do, comes with its own unique set of challenges in today’s market. We explore these challenges and discuss why I believe Buffer ETFs may provide what investors are looking for without the guesswork that comes along with low volatility investing.

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April 1, 2022

A Big Move but More to Come

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Tim Urbanowicz, CFA

Head of Institutional Strategy
Innovator Capital Management

Since late last year, we have been arguing that investors need to look beyond traditional fixed income to help manage risk, as bonds are unlikely to provide the returns, diversification, or protection they have in the past. Below, we explore three reasons why, even after a spike in yields, we believe the risk reward tradeoff remains unfavorable for bonds, and why a new cycle may call for new strategies to help manage risk.

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March 23, 2022

A Market Without Direction: Dissecting Volatility

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BURKE ASHENDEN

ETF Products & Capital Markets Manager
Innovator Capital Management

As we observe markets in 2022, it’s no secret that volatility is high and consumer confidence is low. Perhaps what’s more concerning, however, is that the market seems to have lost its sense of direction. Every day we witness dramatic intraday moves as the market tries to process a barrage of geopolitical factors in a rapid, digital age. The war in Ukraine, the corresponding sanctions, inflation, energy shortages (compounding pre-existing inflation), and rising rates have left investors with a frenzy of factors to consider. While the urge to raise cash may seem prudent, history shows us that staying invested is the answer.

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March 1, 2022

The Market Loves Clarity…. Will it Come Anytime Soon?

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Tim Urbanowicz, CFA

Head of Institutional Strategy
Innovator Capital Management

The markets crave clarity and are being punished because they don’t have it. How aggressive will the Fed be in the fight against inflation? How severe will US and EU sanctions of Russia be and what impact will that have on energy prices? All very important, but unlikely to be known anytime soon. The March 16th meeting, when the Fed will likely announce the magnitude of the first hike, may provide some clarity and some relief, but until the Fed truly gets control of inflation, there will be uncertainty.

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January 26, 2022

2022 Key Risks in Context

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Tim Urbanowicz, CFA

Head of Institutional Strategy
Innovator Capital Management

After a stellar decade-long run, balanced portfolios seem to be running into trouble in 2022. A 40-year high inflation print, rising yields, and a hawkish Fed may have spooked equity and fixed income investors. And as usual, there is no shortage of theoretical comparisons using historical data sets speculating on how portfolios might behave if yields continue to rise or the Fed hikes aggressively. But this time around, there are several unique factors influencing the market that we believe investors should consider as they evaluate risk and position their portfolios accordingly in 2022.

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