KMAR

Innovator U.S. Small Cap Power Buffer ETF - March

Innovator U.S. Small Cap Power Buffer ETF - March (KMAR) seeks to provide exposure to U.S. small-cap stocks while offering downside protection through a defined outcome strategy. The ETF uses options contracts to buffer the first 15% of losses over a one-year period ending each March, while capping upside gains at a predetermined level.

How It Works

KMAR employs a sophisticated options overlay strategy using FLEX options on the Russell 2000 Index to create its defined outcome profile. The fund purchases protective put options to provide downside buffer protection and sells call options to finance this protection, creating an upside cap. The outcome period resets annually each March, with new option positions established. This active management approach requires precise options positioning and daily portfolio adjustments to maintain the buffer and cap levels throughout the outcome period.

Key Features

Provides 15% downside buffer protection over one-year periods, limiting small-cap equity losses during market declines
March annual reset allows investors to enter at known buffer and cap levels with fresh outcome period
Combines small-cap growth potential with defined risk parameters, offering more predictable return profiles than traditional equity ETFs

Risks

This ETF can lose value beyond the 15% buffer if small-cap stocks decline more than the protection level during the outcome period
Upside gains are capped at predetermined levels, potentially missing significant small-cap rallies that exceed the cap threshold
Options complexity and daily rebalancing create tracking error risks and potential for the buffer/cap structure to deviate from targets

Who Should Own This

Best suited for conservative equity investors with 1-year investment horizons seeking small-cap exposure with downside protection. Medium risk tolerance required as losses beyond 15% are possible. Works as a satellite holding (5-15% allocation) for investors wanting defined outcome equity exposure or those concerned about small-cap volatility but seeking growth potential.