This is a defined outcome ETF that tracks the returns of an index tracked by SPY up to a cap while protecting against downside losses over a one-year outcome period. It uses FLEX options to build its protection structure.

It suits defensive investors who want to participate in stock market gains while minimizing downside risk.

It is an actively managed ETF run by Innovator.

By combining FLEX options, the fund provides full downside protection relative to the underlying S&P 500 index over the one-year outcome period. In exchange, upside returns are limited to a preset cap level. A new outcome period begins each September, and the cap and protection level are reset.

• Near-complete downside protection structure
• The September outcome period start allows diversified holdings alongside series from other months

Assets under management (AUM) stand at $261.7M, and the expense ratio is 0.79% per year.

Compared with peer defined outcome funds such as BUFR, SFLR, BUFD, and BUFQ, it differs in how the protection range and cap structure are designed.

The fund tends to follow the underlying index within the outcome period, but with mild price movements inside the cap and protection range. As the end of the outcome period approaches, price volatility varies depending on whether the cap has been reached.

Inflows tend to increase during volatile periods, when demand for defensive asset allocation grows, and interest is expanding alongside the growth of the defined outcome ETF category as a whole.

Its core strength is the full downside protection structure, while its drawback is that upside returns are limited by the cap.

The three funds in the table, BUFR, BUFD, and BUFQ, are ladder-type buffer ETFs from the First Trust Best family, and their protection ranges are designed differently. SFLR is a managed floor structure from the same Innovator family, with a different protection method. PJAN, from the same Innovator Power Buffer family, is a similar substitute that differs only in the month the outcome period starts. If you want a defensive product based on the Nasdaq 100, you can consider BUFQ, and if you want a deeper protection range, you can also review BUFD.

Here are the points to check before investing in ZSEP. Along with the advantages of the protection structure, you should confirm the cap limit, the effect of your entry timing, and the liquidity level in advance to get a satisfactory result.

The main risks are limited returns due to the upside cap and the protection structure not applying if you sell early. The actual cap and protection level may differ depending on when you enter the outcome period.

This is a defined outcome ETF suited to defensive investors who prioritize downside protection. If you want a low fee instead of a protection range, compare it with comparable core ETFs, and if you want a different protection method, you should also compare the SFLR and BUFR families.