Innovator Growth-100 Power Buffer ETF - March (NMAR)

What is a buffer ETF and why does it reset annually?

The Innovator Growth-100 Power Buffer ETF - March (NMAR) belongs to a family of products that solve a specific investor dilemma: the desire to own a concentrated portfolio of the market’s most dynamic stocks while avoiding the worst drawdowns. A buffer ETF uses options contracts to mechanically implement that trade. The simplest version works like this: the fund holds the underlying stocks and simultaneously buys long-term put options (insurance against falling prices). The puts are financed by selling call options (trading away some upside). This leaves the investor protected below a floor price but capped at a ceiling price for the holding period.

NMAR focuses on the Innovator Growth-100 Index, which selects the 100 largest companies by market capitalization from the S&P 500 that meet certain growth criteria — high-momentum stocks in technology, communication services, industrials, and consumer names. It is not a pure cap-weighted index; it emphasizes companies whose earnings and revenue growth outpaces the broader market. That makes the underlying portfolio more volatile than the S&P 500 itself; the buffer is meant to tame that volatility for shareholders willing to accept a capped upside.

The “March” in the name refers to the annual reset cycle. Each March, the options contracts in the fund expire and are replaced with new ones, running through the following March. This mechanics matters because it means the floor and ceiling prices reset based on the market price at that moment. If the market has soared, the new floor is higher, locking in gains; the cost of the new options (and thus the new ceiling) changes based on how expensive options are to buy at that time. The investor does not get to lock in protection forever — it must be renewed, and renewal costs can be higher or lower depending on how volatile the market has been and how much time remains.

How much protection does the buffer provide?

The fund targets a specific buffer level — typically around 15 percent — meaning losses beyond that cap are borne by the fund holder. If the index declines 10 percent, the fund absorbs the loss. If it declines 20 percent, the investor bears the additional 5 percent decline (20 percent loss minus 15 percent buffer). The ceiling is less formulaic and varies based on the cost of the options at the time of purchase, but might run in the 10 to 15 percent range, capping the fund’s gains for the year.

This design appeals to investors who are uncomfortable with the full downside of growth stocks but want to own them anyway. The Growth-100 Index is far more volatile than a broad market index; in the worst bear markets, it can decline 40 percent or more. A 15 percent buffer does not eliminate the pain of such years, but it does reduce the permanent loss of principal to something many investors find tolerable.

The trade-off is the capped upside. In a year where the Growth-100 rises 30 percent, NMAR might deliver 15 percent or less. Over longer periods, this drag compounds, which means the fund will underperform the unhedged index in bull markets. That is the point: protection is never free.

Who should and should not use this fund?

NMAR is designed for investors with a one-year holding period and a specific risk tolerance: someone who wants meaningful exposure to high-growth, high-momentum stocks but becomes emotionally or financially distressed if that portfolio loses more than 15 percent in a year. It is particularly useful as a bucket for investors nearing or in retirement, where a steep drawdown forces untimely sales of other assets to meet living expenses.

Investors who should avoid NMAR include those with long time horizons (ten years or more) and the ability to tolerate volatility — they will simply give away growth for protection they will never use. It is also unsuitable for investors who cannot accept capped gains or who expect the market to rally sharply; they will feel regret at missing upside. And it is not a leveraged hedge; it is not designed to profit from declines, only to soften them.

How to evaluate the fund

A prospective investor should compare NMAR’s buffered returns to the unhedged Growth-100 Index over complete calendar years to see how much protection actually cost in the years that matter — both the strong years and the weak ones. The fund’s fact sheet should spell out the current floor and ceiling clearly. Also review the expense ratio, which is higher than a plain index fund because of the cost of the options overlay and the active management required to implement the strategy. Watch quarterly distributions to see whether the fund is generating income; the underlying growth stocks are not dividend payers, so distributions come from gains or option income, neither of which is guaranteed.

Over many years, the best test is whether owning a buffered fund kept you holding your growth stock position through a severe drawdown rather than panic-selling at the worst moment. If the buffer’s cost means you stayed invested, it paid for itself. If you would have held anyway, the buffer was an unnecessary expense. Understanding yourself, not the fund’s mechanics, is the key to deciding whether this product belongs in your portfolio.