This is a defined outcome ETF that gives exposure to a U.S. equity index while using options to protect against a set range of losses. It cushions a certain amount of decline over a one-year outcome period, but in exchange applies a cap to upside returns, and the structure is reset every January.

It suits moderate-risk investors who want to invest in U.S. stocks, receive protection against a set range of declines, and accept an upside cap.

It is a passive (index-tracking) ETF managed by Innovator.

While giving exposure to a U.S. equity index, the fund uses an options structure to cushion a set range of declines over the one-year outcome period, and in return places a cap on upside returns. A new buffer and cap are set every January, and buying partway through the outcome period can change the protection and cap that apply.

• Structure that cushions a set range of declines
• Defined outcome design with an upside cap

Assets under management (AUM) stand at $348.2M, and the total expense ratio (Expense Ratio) is 0.79% per year.

Compared with other buffer and defined outcome ETFs such as BUFR and BUFD, the main points of comparison are the level of protection, the cap level, and the outcome period.

Buffer strategies tend to show returns limited relative to the underlying index in rising markets because of the cap, while in falling markets they cushion a set range and reduce the drawdown. The protection and cap that actually apply differ depending on whether you enter partway through the outcome period.

Defined outcome products tend to attract inflows from demand for downside protection when market uncertainty rises, and money sometimes moves into this product group when interest in volatility management increases. It is also worth noting that performance varies with market conditions and the outcome period.

Its strength is a defined cushion against declines, while the upside cap, dependence on the outcome period, and changed conditions for mid-period entry are points to consider.

For direct exposure to U.S. stocks without protection, direct alternatives include SPY and VOO, which track the S&P 500, and for a laddered buffer that spreads across multiple outcome periods, products such as BUFR are also worth comparing. Among buffer products with a different start month, products such as GFEB can also be considered. The three products shown in the table, BUFR, BUFD, and PJAN, differ in protection range and structure: a laddered buffer, a deep buffer, and a buffer with a different start month, respectively. This ETF is differentiated by its January-based defined outcome buffer structure.

Here are the points to review before investing in BJAN. The downside cushion is attractive, but the upside cap, dependence on the outcome period, and the limits of the cushion should be checked in advance. It is best to approach the fund only after fully understanding the defined outcome structure.

The cap in strong rising markets and large declines that exceed the buffer are the main variables for performance, and buying partway through the outcome period changes the protection and cap that apply. Without a sufficient understanding of the defined outcome structure, results may differ from expectations.

It is a suitable candidate for moderate-risk investors who want to invest in U.S. stocks while being protected against a set range of declines. For investing without protection, products like SPY and VOO fit, and for a defined outcome buffer structure, it is advisable to choose this product after understanding its structure.