Innovator Growth-100 Power Buffer ETF - May (NMAY)

The Innovator Growth-100 Power Buffer ETF - May (NMAY) is the May-reset counterpart to its March sibling — same underlying index, same buffer mechanics, different reset calendar. It exists because Innovator issued a family of these products with staggered resets, allowing investors to choose the reset month that aligns with their own portfolio review cycle or tax planning. NMAY handles the same job as NMAR: it holds the top 100 growth-momentum stocks and wraps them in options-based protection that resets each May.

The underlying Innovator Growth-100 Index gravitates toward the most momentum-driven large-cap names. In recent years that has meant a heavy tilt to mega-cap technology — a portfolio unlikely to lag in a bull market but far more vulnerable than the broad market in a downturn. The index has no dividend yield to speak of, so returns are purely capital-based. That makes the buffer valuable on bad years, pointless overhead on good ones.

Reset cycles matter more than casual investors realize. When May arrives and the old options expire, the fund buys fresh ones. If the market has rallied strongly by May, the new floor locks in gains at a higher level — good for the investor. If the market has crashed by May, the new floor is lower, offering less protection going forward. The new ceiling cost depends on current volatility: expensive options mean a tighter cap; cheap options mean more room to run. This monthly lottery is built into the fund design.

The mechanics are straightforward but worth understanding. The fund holds 100 growth stocks outright. It then buys long-dated put options (a floor) and sells out-of-the-money calls (a ceiling). The puts are insurance — if the index drops, the puts gain value and offset losses. The short calls finance that insurance by capping how high the fund can go. Both expire in May, then reset.

Expense ratios for buffered products run higher than plain equity index funds because the options operations are not free. Buying puts and selling calls requires constant management: monitoring prices, managing assignment risk on the short calls, monitoring collateral. These costs are why buffered funds are best used as satellite positions within a broader portfolio, not as the core holding.

The tension is between fidelity and cost. A 15 percent buffer stops doing much good if the market drops 30 percent (you still lose 15 percent) or more (worse). But the buffer is most valuable in smaller declines — the 5 to 15 percent pullbacks that happen every few years and psychologically test most investors. If NMAY’s buffer keeps an investor from panic-selling during one of those normal corrections, it may have paid for itself many times over.

The May reset adds a small tax-timing angle. Investors who want to harvest losses or recognize gains for tax reasons might align NMAY purchases with their own review cycle. More typically, the reset date is just a calendar artifact — investors hold the fund year-round without regard to the reset, accepting whatever terms the May reset brings.

One underappreciated risk: a sharp gap move. If the underlying index drops steeply in a single day (as happened in 2020, 2022, and 2024), the fund cannot fully hedge that shock because options are priced and executed once per day in normal circumstances. A truly catastrophic market event might breach the buffer before the fund can adjust. Buffered funds are protection against normal market volatility, not insurance against tail-risk events or circuit-breaker halts.

Comparing NMAY to NMAR is meaningless except for the reset month. Both track the same index, both offer the same buffer/cap structure, both will post nearly identical returns over full calendar years — the only difference is which May (or March) the options renew. An investor should pick based on when they want their reset to occur, not because they think one month’s options will be cheaper than another’s; that is speculation, not investing.

Long-term backtests of this strategy show that the buffered version lags the unhedged index over periods including multiple bull markets (where upside caps cost you dearly), and outperforms in periods heavy on corrections and bear markets (where the buffer pays). Over 10-year periods, the drag of capped returns often exceeds the gains from buffer protection, which means the fund is best used for investors with a 3-to-5-year holding horizon or as a portion of a portfolio for those nearing retirement. Anyone with a longer horizon and stomach for volatility should own the unhedged index instead.