This is a defined-outcome ETF that provides exposure to the Nasdaq 100 Index while using options to protect against a set range of losses. Over a one-year outcome period, it buffers a certain amount of downside in exchange for a cap on upside returns, and the structure is reset every January.

It suits moderate-risk investors who want to invest in Nasdaq growth stocks, are willing to accept an upside cap, and want protection against a certain range of declines.

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

While providing exposure to the Nasdaq 100 Index, the fund uses an options structure to buffer a set amount of downside over the one-year outcome period, and in return places a cap on upside returns. A new buffer and cap are set each January. This adds downside cushioning to volatile Nasdaq growth stocks, but investors who enter midway through the outcome period face a different level of protection and a different cap.

• Downside buffer over a set range on the Nasdaq 100
• Defined-outcome design with an upside cap

Assets under management (AUM) stand at $326.1M, and the expense ratio is an annual 0.79%.

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

Buffer strategies tend to trail the underlying index in rising markets because of the cap, while in falling markets they cushion a set range of losses and reduce the drawdown. Because the Nasdaq 100 carries a heavy weighting in technology stocks and is quite volatile, the downside buffer is relatively meaningful.

Defined-outcome products tend to attract inflows from investors seeking downside protection when market uncertainty rises, and money sometimes shifts into this product category when demand grows for adding protection to volatile growth stocks. It is also worth noting that performance varies with market conditions and the outcome period.

Its main strength is the downside buffer on Nasdaq growth stocks, while the upside cap, dependence on the outcome period, and the limits of the buffer are points to consider.

For investors who want to own the Nasdaq 100 outright without protection, direct alternatives include QQQ and QQQM, and for those who want an S&P 500 based buffer, products such as BJAN are also worth comparing. The three products shown in the table, BUFR, BUFD, and PJAN, are a ladder buffer, a deep buffer, and an S&P 500 power buffer respectively, and they differ in underlying index and level of protection. What sets this ETF apart is that it applies a January-based defined-outcome buffer to the Nasdaq 100.

Here are the points to review before investing in NJAN. The downside buffer on Nasdaq growth stocks is attractive, but the upside cap, dependence on the outcome period, and the limits of the buffer should be confirmed in advance. It is best to approach the fund only after fully understanding the defined-outcome structure.

The main variables for performance are the cap in strong rallies and large declines that exceed the buffer, and buying midway through the outcome period changes the protection and cap that apply. The Nasdaq 100 is highly volatile, so losses can occur when declines exceed the buffer.

It is a suitable candidate for moderate-risk investors who want to invest in Nasdaq growth stocks while being protected against a set range of declines. For investing without protection, consider products such as QQQ and QQQM, and for a Nasdaq 100 defined-outcome buffer, it is advisable to choose this product after understanding its structure.