Building resiliency is the name of the game with retirement portfolios and that’s an objective the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can help investors achieve.
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. NUSI is becoming all the more important in today’s climate.
“Lack of access to workplace retirement plans, low saving rates, gaps in participation and employment, withdrawals to meet more pressing needs – all these undermine the ability of hardworking people to retire with dignity,” according to BlackRock research.
NUSI Provides Retirement Buffers
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.
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.
NUSI is increasingly relevant as advisors look for alternative avenues for reliable income for clients.
“If we want to provide millions of American workers with a secure retirement, we must focus our efforts on creating new, modernized solutions that seek to provide the opportunity for guaranteed income where employees are already saving,” according to BlackRock.
Covered call strategies can potentially augment a portfolio during periods of heightened volatility. The covered-call options allow an investor to hold a long position in an asset while simultaneously writing, or selling, call options on the same asset.
NUSI aims for 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.
For more on income strategies, visit our Retirement Income Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.