Want Exposure to the Nasdaq-100® But Worried About a Correction? Meet this Exciting New ETF

Many investors seek to participate in the growth of today’s most innovative technology companies. But with markets near all-time highs, they worry about the potential for market volatility. A new exchange traded fund from Innovator ETFs aims to address both these concerns at the same time—offering investors a risk-managed equity solution that lets them sleep at night.

The Innovator Hedged Nasdaq-100 ETF (Ticker: QHDG), launching August 20, is designed to provide long-term exposure to the globally recognized Nasdaq-100 Index®.  Large-cap technology firms, many of which are listed on the Nasdaq Stock Market® and tracked by the Nasdaq-100, have delivered outstanding performance for some time—and their position as market generals seems set to continue, especially with the emergence of generative AI.

But while the long-term outlook for the Nasdaq-100 appears solid, broader market volatility over shorter horizons can test an investor’s staying power, to say nothing of their stress levels. And corrections are common: According to Ryan Detrick of Carson Research, “23 of the past 44 years saw the S&P 500 correct 10% or more at some point during the year.”  In many of those episodes, the Nasdaq-100 suffered even greater drawdowns.

That’s where the Innovator Hedged Nasdaq-100 ETF can help. QHDG is a risk-managed approach for those investors who want exposure to the Nasdaq-100 Index but with less volatility.

QHDG’s risk-managed approach may also provide a better hedge against corrections than bonds. In years past, bonds tended to move inversely to equities. As a result, fixed income played a key role in lowering a portfolio’s volatility when risk aversion hit equity markets.

That relationship may no longer hold, however. Indeed, stocks and bonds have been positively correlated as of late, with yields rising amid bouts of market volatility (and possibly being the cause of many corrections). This regime change could persist. Research from Bank of America suggests that bonds only provide a hedge against equity drawdowns when inflation is near record lows. This means that if inflation stays elevated, investors must look to a different hedge to achieve the same level of portfolio volatility.

The Innovator Hedged Nasdaq-100 ETF goes some way toward allowing investors to have their cake and eat it, too. They can get the exposure to the Nasdaq-100 they desire, with significant mitigation of the typical risks that come with a long-only allocation.

From time to time, markets are seas of red. And it can be comforting to know that you have some measure of protection when things get rocky.

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