Financial advisors now have a tool that was previously out of reach: ETFs designed to generate positive returns even when markets fall. At the September 2025 Future Proof Festival, Trey Martin, VP, Sales, at Innovator ETFs, sat down with The Wealth Advisor to discuss the company’s latest innovation—dual directional buffered ETFs—what he describes as “a first of their kind strategy.”
The September launch included two initial offerings: DDTS, with a 10% buffer, and DDFS, with a 15% buffer, with plans for monthly rollouts to give advisors and clients fresh outcome periods. DDTO and DDFO listed on October 1.
Beyond Traditional Risk Management
Managing client risk in volatile markets has always been a delicate balance. Traditional buffered ETFs provide some protection—they shield investors from a portion of losses—but they still decline when markets fall, albeit at a reduced rate. Innovator’s dual directional ETFs are designed to flip that dynamic for mild to moderate downturns, giving advisors a tool to potentially generate positive returns even when markets dip.
Here’s how it works: Within the buffer zone, which is 10% for DDTS and 15% for DDFS, the fund mirrors the market’s decline on the upside. So, if the S&P 500 drops 10%, the ETF could gain roughly the same amount. If losses extend beyond the buffer, the fund behaves like a typical buffered ETF, limiting downside exposure according to its predefined protection level. The bidirectional design aims for a smoother, more predictable path for client portfolios, where moderate declines can become opportunities rather than setbacks.
“Essentially, what it does is it gives you the ability to make money in negative markets,” Martin says. “If the market’s down anywhere in that zero to –15% window, our ETF is positive that amount. So, if it’s down 10%, we’re up 10%,” he says.
On the upside, the ETFs retain conventional participation, allowing investors to benefit from gains in rising markets. “The only difference is you have that inverse relationship when you’re in that buffer zone,” adds Martin. “And then on the upside, market’s going up, you’re going to participate one to one to a predetermined cap.” DDTS allows upside participation up to 12.65%, while DDFS caps gains at 9.30%, both gross of fees and expenses. By blending upside and limited inverse exposure within a single ETF, advisors can potentially present clients with a defined, understandable outcome for moderate market moves.
Democratizing Institutional Strategies
Innovator’s dual directional ETFs are part of a larger mission: translating sophisticated, institutional strategies into ETF formats that advisors can deploy broadly. According to Martin, “a lot of what we do is driven by advisor demand,” particularly strategies popular in structured notes, insurance products, and hedge funds. “And then taking that and saying, Okay, how can we now replicate that in the ETF wrapper? That’s where we started.”
Rather than reimagining the mechanics, Innovator adapts payoff profiles—or potential outcomes, gains or losses, that an investor might expect based on the underlying asset’s performance—that have already proven popular in other vehicles.
“We didn’t reinvent the wheel as far as what this product is doing,” he explains. “We just took what was extremely popular in the payoff profiles and the bank products and some fixed index annuities out there that give you an asymmetric return potential, and we put it in the ETF.”
The ETF format provides clear advantages over traditional structured products: daily liquidity, lower fees, tax efficiency, and easy scalability across client portfolios without the administrative burden of individualized structured notes. Martin points out the operational benefits, noting that “the ETF allows for a more seamless addition to your portfolio” compared to custom notes requiring specialized paperwork and relationships.
Defined Outcomes for Client Communication
A hallmark of Innovator’s product suite is predictability. With more than 150 ETFs offering different forms of downside mitigation or defined exposure, advisors can set precise expectations.
Innovators Buffer ETFs™ “give you the ability to tell your client exactly what to expect relative to an index 12 months out or three months out or six months out, or whatever duration you’re looking at,” Martin says.
The dual directional structure adds a unique layer to client discussions. Advisors can potentially point to potential positive returns during modest market declines, rather than explaining why a buffered fund still lost value during a correction. According to Innovator research, 75% of all one-year S&P 500 corrections fall between 0% and –15%,1 making the dual directional strategy likely relevant for a majority of market scenarios.
For clients wary of market timing or seeking some inverse exposure without full shorting strategies, dual directional funds may offer a practical middle ground. Investors can participate in gains during bull markets while benefiting from inverse exposure in mild to moderate downturns.
Expanding Product Architecture
The dual directional launch represents is one more step in Innovator’s broader product expansion. Martin mentions additional strategies in development, including “auto-callable ETFs that’ll be launching soon” and continued growth across different time frames and buffer levels.
The company currently offers quarterly buffers for three-month outcome periods and full buffer protection across various intervals including six-, 12-, and 24-month periods. With a monthly rollout schedule, advisors can access new outcome periods and adjust allocations to evolving market conditions.
Implementation Considerations
Innovator’s ticker system makes the products easy to navigate: DD indicates dual directional, T or F represents the 10% or 15% buffer, and the final letter denotes the monthly series—S for September. Both DDTS and DDFS track SPDR® S&P 500® ETF Trust (SPY) performance, using options overlays aiming to deliver the asymmetric risk-reward profile, while maintaining expense ratios of 0.79%.
The Defined Outcome ETF™ structure means investors know potential upside caps and downside buffers before investing, enabling more precise portfolio construction and client communication. The one-year outcome periods reset monthly, providing flexibility for tactical allocation adjustments.
Meeting Advisor Demand
Innovator ETFs’ focus on advisor-driven innovation reflects growing demand for alternatives to traditional equity and bond allocations. The dual directional strategy’s goal is to address specific client concerns about market participation during uncertain periods, offering a way to benefit from volatility rather than simply enduring it.
By packaging sophisticated options strategies into accessible formats, Innovator helps enable advisors to offer institutional-quality solutions across their entire client base rather than limiting such strategies to high-net-worth accounts with private banking relationships.
“We have a lot of things in the pipeline that we’re trying to offer, more solutions that are popular in the other spaces, and we’re just trying to give them to you in an ETF so they’re more accessible,” Martin says.
The dual directional buffer ETFs mark another development in the evolution of defined outcome investing, giving advisors tools to construct portfolios that aim for more predictable returns while seeking to retain growth potential. As market uncertainty persists, strategies that seek to generate positive returns across multiple scenarios are increasingly valuable for advisors and clients alike.
1Bloomberg, Innovator. Data from 12/31/1957–3/31/2025. Rolling one-year performance of the S&P 500 Price Return Index (SPX) was analyzed for all periods resulting in a loss. 75% percent represents the portion of 12-month periods during which SPX returns were between 0% and –15%. Past performance is not necessarily indicative of future results. One cannot invest directly in an index. Index performance does not account for fees and expenses.
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Additional Resources
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Disclosures
The Fund faces numerous risks including buffered loss risk, capped upside return risk, inverse performance risk, outcome period risk, upside cap change risk, upside participation risk, liquidity risk, management risk, nondiversification risk, operation risk, trading issues risk, and valuation risk, among others. For a detailed list of Fund risks, see the prospectus.
Fund shareholders are subject to an upside return cap (the “Cap”) that represents the maximum percentage return an investor can achieve from an investment in the Fund for the Outcome Period, before fees and expenses. If the Outcome Period has begun and the Fund has increased in value to a level near the Cap, an investor purchasing shares at that price has little or no ability to achieve gains but remains vulnerable to downside risks. The Cap may rise or fall from one Outcome Period to the next. The Cap, and the Fund’s position relative to it, should be considered before investing in the Fund. The Funds’ website, www.innovatoretfs.com, provides important Fund information as well information relating to the potential outcomes of an investment in a Fund on a daily basis.
The Fund seeks to provide positive returns equal to the absolute value of the reference asset’s price decreases (Inverse Performance) if the reference asset experiences negative returns that are less than or equal to the Inverse Performance Threshold. If the reference asset decreases in value beyond the Inverse Performance Threshold over the course of the Outcome Period, the Fund will not provide any positive returns. Accordingly, the Fund’s value could drop significantly as a result of its Inverse Performance Threshold being exceeded at the end of the Outcome Period whereby any gains experienced by the Fund will be lost, and the buffer will be provided to shareholders. Furthermore, if the Outcome Period has begun and the reference asset has decreased in value below its initial value at the start of the Outcome Period, an investor purchasing Shares at this point may not experience Inverse Performance to the extent of the Inverse Performance Threshold and will remain vulnerable to downside risks.
If the reference asset experiences losses over the course of the Outcome Period that exceed the Inverse Performance Threshold, the Fund seeks to provide a buffer, up to the Fund’s buffer level, against reference asset losses during the Outcome Period.
If an investor is considering purchasing Shares during the Outcome Period, and the Fund has already decreased in value by an amount that exceeds the Inverse Performance Threshold, an investor purchasing Shares at that price will have increased gains available prior to reaching the Upside Cap but may not benefit from the buffer that the Fund seeks to provide for the remainder of the Outcome Period as any subsequent losses will be experienced on a one-to-one basis. Conversely, if an investor is considering purchasing Shares during the Outcome Period and the Fund has already increased in value, then a shareholder may experience losses that exceed the buffer, which is not guaranteed.
The Fund will not terminate after the conclusion of the Outcome Period. After the conclusion of the Outcome Period, another will begin. There is no guarantee that the Outcomes for an Outcome Period will be realized.
FLEX Options Risk. The Fund will utilize FLEX Options issued and guaranteed for settlement by the OCC (Options Clearing Corporation). In the unlikely event that the OCC becomes insolvent or is otherwise unable to meet its settlement obligations, the Fund could suffer significant losses. Additionally, FLEX Options may be less liquid than standard options. In a less liquid market for the FLEX Options, the Fund may have difficulty closing out certain FLEX Options positions at desired times and prices.
The Fund’s investment objectives, risks, charges and expenses should be considered carefully before investing. The prospectus and summary prospectus contain this and other important information, and it may be obtained at www.innovatoretfs.com. Read it carefully before investing.
Investing involves risk. Principal loss is possible. Innovator ETFs® are distributed by Foreside Fund Services, LLC.
