Individuals across the country dream of retiring early, but many don’t where to find the tools to successfully navigate the journey. A solid starting point is the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI), an income-generating exchange traded fund relevant to investors of all ages.
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. 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 one of the few exchange traded funds designed to deliver both income and downside protection under one umbrella. With markets seemingly overdue for a correction, NUSI is a relevant consideration today.
“While more than 18 million people in the U.S. continue to collect unemployment benefits, the pandemic has led some more fortunate American workers to save money and even plan for an early retirement,” reports Gabriel Cortes for CNBC. “The transition to remote work while earning a pre-pandemic income has encouraged less spending and more storing up for another day. Personal savings hit a historic high in April when economic uncertainty prompted more Americans to stockpile cash, and while the personal savings rate has fallen significantly since then, it’s still at levels not seen since 1975.”
Smooth the Road to Retirement
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 is also appealing to a younger demographic that wants to get to retirement early.
“Millennials are digital natives, and many of them transitioned to remote work without much problem. Some ditched pricey apartments in expensive cities and moved to cheaper areas or even back home with their parents,” according to CNBC.
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.
For more on income strategies, visit our Retirement Income Channel.