2020 was one for the books. Unfortunately, the asset allocation picture isn’t getting much clearer in 2021. With near-zero interest rate policy the never-ending normal, new approaches to solving the asset allocation riddle are needed.
In the upcoming webcast, Rethinking Asset Allocation and Income in 2021, Christopher C. Graham, CIO, Nationwide Funds Group; Curt Brockelman, Managing Partner & Co-Founder, Harvest Volatility Management; and Aaron Gilman, Chief Investment Officer, Independent Financial Partners (IFP), will tackle asset allocation for the new year, with a focus on generating consistent income.
For example, the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can help investors target high current income with less risk relative to traditional income-focused investments. The fund strategy seeks to provide some downside protection while maintaining upside potential. Harvest Volatility Management sub-advises the fund.
The Nationwide Risk-Managed Income ETF uses an options trading strategy called a protective net-credit collar to generate income. The options strategy sells an upside call option and uses a portion of the proceeds received to buy a put option to hedge downside risk on an underlying portfolio of securities.
A covered call refers to an options strategy where an investor writes or sells a call option on an asset that they already own or bought on a share-for-share basis to generate income via premiums derived from the sale of the call options.
A protective put is an options strategy where an investor purchases a put option on an asset that they already own or bought on a share-for-share basis to limit potential losses. The protective put will cause profits derived from the strategy to be reduced by the premium paid for the put, but it limits the maximum potential losses.
The NUSI ETF will try to achieve high monthly income generation, portfolio volatility reduction, reduced duration risk, and interest rate sensitivity, capital appreciation from equity participation, downside risk mitigation, and enhanced tax efficiency of index options.
Financial advisors who are interested in learning more about asset allocation and income strategies can register for the Thursday, January 28 webcast here.