An unfortunate financial result of the coronavirus pandemic is that many investors are delaying retirement planning or contributing to retirement accounts. The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can help get those investors back on track.
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 coronavirus crisis has had a profound economic impact, and while some people have managed to coast through the past five months financially unscathed, others are truly struggling to make ends meet. It’s not surprising, then, to learn that 27% of Americans have either stopped funding their retirement savings or have decreased their IRA or 401(k) contributions due to the pandemic, according to a new FinanceBuzz survey,” reports Statesville.com.
Retirement Income With NUSI
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 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.
“According to the FinanceBuzz survey, a large number of Americans have already gotten a late start on the long-term savings front, with over 15% not beginning until their 40s, and 21% having not yet started at all,” reports Statesville.
With statistics like that, it’s difficult for investors that are getting a late start on retirement saving to rely on traditional assets such as bonds. That means NUSI is could be pivotal for those looking to make up for lost time when it comes to retirement planning.
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.