Retirement planning can be difficult, but the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) is one exchange traded fund that can ease that burden for forward-thinking investors.
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.
“The first step in the [retirement planning] process is information gathering that uncovers, among other things, goals, and priorities,” reports The Street. “The second step requires crunching numbers, including anticipated income and expenses in retirement and creating a household balance sheet. The household balance sheet reflects the present value of anticipated income in retirement and anticipated expenses.”
NUSI: Safety and Reliable Income
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.
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.
Another advantage of NUSI is that it’s a clean, straight-forward strategy, an important facet considering the difficult and often delicate retirement planning process.
“The third step involves implementing the plan using what some would call a retirement policy statement. It involved making sure assets are allocated in the right risk-management techniques and those assets are located in the right accounts. It also requires establishing spending and reserves accounts for everyday spending and emergencies,” according to The Street.
NUSI has a distribution yield of 7.81% and is up more than 5% year-to-date.
For more on income strategies, visit our Retirement Income Channel.