The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) helps both retirees and future planners with one of retirement’s most important objectives: making income last longer.
NUSI can act as a complement to traditional equity and fixed income allocations or as the ideal protective hedge for investors with heavy exposure to technology and growth stocks because the fund is a “rules-based options trading strategy that seeks to produce high income using the Nasdaq-100 Index,” according to Nationwide.
With monthly distributions, NUSI’s steady income is increasingly relevant with retirees living longer.
“Retirees are living longer, and general living expenses are continuing to rise. And considering you may not be able to rely on Social Security benefits as much as previous generations, you’ll likely have to lean on your savings for the bulk of your retirement income,” reports Kenosha News.
NUSI: Picking Up Retirement Slack
NUSI is an actively managed portfolio of stocks included in the Nasdaq-100 Index and an options collar. Per index rules, the fund only invests in the top 100 largest by market cap, nonfinancial stocks listed on NASDAQ. A collar strategy involves selling or writing call options and buying put options, thus generating income to hedge some downside risk. The strategy seeks to generate high current income monthly from any dividends received from the underlying stock and the option premiums retained.
“One common retirement rule of thumb is the 4% rule, which states that if you withdraw 4% of your total savings during the first year of retirement and then adjust your distributions each subsequent year for inflation, your money should last approximately 30 years,” said Kenosha News.
The Nationwide Risk-Managed Income ETF incorporates options exposure to help generate income and mitigate risk as a way to enhance total returns. Investors have long capitalized on covered call options strategies for income generation or protective put options strategies to protect against and limit losses.
“The 4% rule assumes your spending levels will remain relatively consistent over the years, save for adjustments in inflation. But in reality, 80% of older adults experience significant spending shifts throughout retirement, according to a report from J.P. Morgan,” reports Kenosha News.
For more on income strategies, visit our Retirement Income Channel.