New Cerulli research finds that significant tailwinds such as home-office approvals at large broker/dealers could accelerate asset growth in the Defined Outcome exchange-traded fund (ETF) category to a 29% to 35% five-year compound annual growth rate (CAGR). In the more optimistic scenario, Defined Outcome ETFs™ are projected to more than quadruple over a five-year period, reaching more than $334 billion assets under management by 2030¹. If achieved, this growth would significantly outpace the growth of the broader ETF industry, which is expected to grow at a 15% rate during the same period, according to the white paper, The Future of Outcome-Based Investing: How Defined Outcome ETFs™ Are Poised for Rapid Growth, released in partnership with Innovator Capital Management, LLC (Innovator).

The rapid growth of Defined Outcome ETFs™ aligns with a broader transformation in the wealth management industry. Advisors are moving toward fee-based advisory models that emphasize scale and personalization and they are adopting products that align with both objectives. At the same time, a growing segment of Baby Boomers (who control $48 trillion, more than half of investable assets in the U.S. market) are entering retirement, transitioning from asset accumulation to decumulation. As they transition, Cerulli believes there will be increased demand for predictability, downside protection, and flexibility, reshaping how advisors approach risk management. “Traditional risk mitigation strategies offer diversification and stability, yet they often fall short on providing the certainty that clients increasingly seek,” says Daniil Shapiro, director.

The research outlines several use cases important to advisors and focuses on how each applies to wealth managers.

Defined Outcome ETFs™ aim to offer the following characteristics:

• Volatility Dampener: Provides a level of certainty to clients based on buffer level if held for the entire Outcome Period, potentially helping risk-averse clients remain invested by dampening volatility

• Downside Risk Protection: Offers a level of downside protection for advisors aiming to manage cash flow. In exchange, shareholders forego gains beyond the stated cap.

• Market Participation: Boosts potential equity market growth exposures, up to a cap, for near-retirement age clients overweighted to fixed-income sleeves; however, prospective investors should be willing to hold shares for the entire outcome period in order to achieve the stated outcomes

• Cost Effectiveness: Lower cost compared to structured products

• Enhanced Liquidity: Increases liquidity through the ETF wrapper compared to legacy downside protection products, such as structured notes

The wide range of buffer levels and upside exposures offered by Defined Outcome ETFs™ enable advisors to tailor strategies to each client’s needs. “As market uncertainty persists and investor expectations evolve, Defined Outcome ETFs™ have emerged as a dynamic solution for delivering personalized risk management at scale. Advisors increasingly turn to these products to offer more predictable outcomes and help clients remain invested, especially those concerned about volatility and downside risk,” comments Graham Day, EVP, CIO of Innovator.

Advisors consistently highlight the behavioral benefits of Defined Outcome ETFs™ in helping clients remain invested during periods of market volatility; however, home-office executives cite concerns such as product complexity and slowing platform adoption. For example, should an investor purchase ETF shares that have appreciated since the start their outcome period, they may not be able to realize the full extent of the starting cap and will be exposed to downside until the ETF has returned to its price at the start of the outcome period. “Executives want to see how these products would perform through a significant market drawdown to better understand and grow comfortable that the products would perform the way they were designed,” comments Shapiro. “Issuers that can satisfy these concerns through product innovation and advisor and home-office education will unlock a significant addressable market for the product.”

¹ Source: ISS Market Intelligence Simfund, Cerulli Associates as of 11/7/2025. This estimate is based upon Cerulli’s proprietary research and has been provided for illustrative purposes only. There is no guarantee that the projections will come to fruition. For the purpose of conducting this research, Defined Outcome ETFs™ included ETFs identified as Buffer ETFs™ and equity hedge ETFs by Simfund. Two scenarios were evaluated. The optimistic growth scenario assumed that the geometric average of flows during the last 6 years of 41% would remain consistent through 2027 and incrementally regressing to the industry average. A moderate growth scenario assumed a gradual decline in the geometric average of the growth in flows from 34% (the average over the last 3 years) to the industry average of 8% by 2030. JPMorgan Capital Markets Assumptions were utilized in projecting the growth of assets. The projections herein assume that the relevant industry stakeholders and market infrastructure would continue to support the growth of this category.

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The Funds have characteristics unlike many other traditional investment products and may not be suitable for all investors. For more information regarding whether an investment in the Fund is right for you, please see "Investor Suitability" in the prospectus.

The Outcomes may only be realized by investors who continuously hold Shares from the commencement of the Outcome Period until its conclusion. Investors who purchase Shares after the Outcome Period has begun or sell Shares prior to the Outcome Period’s conclusion may experience investment returns that are very different from those that the Fund seeks to provide.

The Funds face numerous market trading risks, including active markets risk, authorized participation concentration risk, buffered loss risk, cap change risk, capped upside return risk, correlation risk, liquidity risk, management risk, market maker risk, market risk, non-diversification risk, operation risk, options risk, trading issues risk, upside participation risk and valuation risk. For a detailed list of Fund risks see the prospectus.

Fund shareholders are subject to an upside return cap (the “Cap”) that represents the maximum percentage return an investor can achieve from an investment in a Fund for the Outcome Period, before fees and expenses. If the Outcome Period has begun and a Fund has increased in value to a level near to the Cap, an investor purchasing shares at that price has little or no ability to achieve gains but remains vulnerable to downside risks. Additionally, the Cap may rise or fall from one Outcome Period to the next. The Cap, and the Fund’s position relative to it, should be considered before investing in a Fund. The Funds’ website, www.innovatoretfs.com, provides important Fund information as well information relating to the potential outcomes of an investment in a Fund on a daily basis.

The Funds only seek to provide shareholders that hold shares for the entire Outcome Period with their respective buffer level against Reference Asset losses during the Outcome Period. You will bear all Reference Asset losses exceeding the Buffer. Depending upon market conditions at the time of purchase, a shareholder that purchases shares after the Outcome Period has begun may also lose their entire investment. For instance, if the Outcome Period has begun and the Fund has decreased in value beyond the pre-determined Buffer, an investor purchasing shares at that price may not benefit from the Buffer. Similarly, if the Outcome Period has begun and the Fund has increased in value, an investor purchasing shares at that price may not benefit from the Buffer until the Fund’s value has decreased to its value at the commencement of the Outcome Period.

If an investor is considering purchasing Shares during the Outcome Period, and the Fund has already decreased in value by an amount that exceeds the Inverse Performance Threshold, an investor purchasing Shares at that price will have increased gains available prior to reaching the Upside Cap but may not benefit from the buffer that the Funds seek to provide for the remainder of the Outcome Period as any subsequent losses will be experienced on a one-to-one basis. Conversely, if an investor is considering purchasing Shares during the Outcome Period and the Funds have already increased in value, then a shareholder may experience losses that exceed the buffer, which is not guaranteed. 

These Funds are designed to provide point-to-point exposure to the price return of the Reference Asset via a basket of Flex Options. As a result, the Funds are not expected to move directly in line with the Reference Asset during the interim period.

Investors purchasing shares after an Outcome Period has begun may experience very different results than the respective Fund’s investment objective. Following the initial Outcome Period, each subsequent Outcome Period will begin on the first day of the month each respective Fund was incepted. After the conclusion of the Outcome Period, another will begin.

FLEX Options Risk. The Funds will utilize FLEX Options issued and guaranteed for settlement by the Options Clearing Corporation (OCC). In the unlikely event that the OCC becomes insolvent or is otherwise unable to meet its settlement obligations, the Funds could suffer significant losses. Additionally, FLEX Options may be less liquid than standard options. In a less liquid market for the FLEX Options, the Funds may have difficulty closing out certain FLEX Options positions at desired times and prices. The values of FLEX Options do not increase or decrease at the same rate as the reference asset and may vary due to factors other than the price of reference asset.

Certain information herein contains forward-looking statements such as “will,” “may,” “should,” “expect,” “target,” “anticipate,” or other variations of these statements. Forward-looking statements are based upon assumptions which may not occur, while other conditions not taken into account may occur. Actual events or results may differ materially from those contemplated in such forward-looking statements. Such forward-looking statements are not necessarily based upon explicit criteria and assumptions, but rather, represent the opinions of the authors stated herein. This material is provided for informational purposes only. Evaluations of market conditions are as of the date indicated, are subject to change without notice, and are not intended to be a forecast of investment outcomes.

This material is provided for informational purposes only, and it is not a recommendation or offer to purchase any security or participate in any particular trading strategy. Readers should consult with their investment advisers to obtain investment advice and should not rely upon the information herein.

Investing involves risk. Loss of principal is possible. Innovator ETFs® are distributed by Foreside Fund Services, LLC.

This research, conducted by Cerulli Associates, has been commissioned by Innovator. Cerulli Associates is not affiliated with Innovator or Foreside Fund Services, LLC.

The Funds’ investment objectives, risks, charges and expenses should be considered carefully before investing. The prospectus and summary prospectus contain this and other important information, and it may be obtained at innovatoretfs.com. Read it carefully before investing.

The following marks: Accelerated ETFs®, Accelerated Plus ETF®, Accelerated Return ETFs®, Barrier ETF®, Buffer ETF™, Defined Income ETF™, Defined Outcome Bond ETF®, Defined Outcome ETFs™, Defined Protection ETF®, Define Your Future®, Enhanced ETF™, Floor ETF®, Innovator ETFs®, Leading the Defined Outcome ETF Revolution™, Managed Buffer ETFs®, Managed Outcome ETFs®, Step-Up™, Step-Up ETFs®, 100% Buffer ETFs™ and all related names, logos, product and service names, designs, and slogans are the trademarks of Innovator Capital Management, LLC, its affiliates or licensors. Use of these terms is strictly prohibited without proper written authorization.