Many workers, of varying age groups, are struggling to set aside enough money for retirement and that tax is made even harder against this year’s backdrop of low bond yields and rampant dividend cutting, but the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can ease the burden.
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.
“Retirement is expensive and becoming more so all the time. Meanwhile, fewer jobs are offering pensions to help cover retirement costs, and some are even canceling 401(k) matching temporarily due to the strain this latest recession places on their finances,” reports Fox Business. “Some workers are also struggling to set aside money for their futures right now, and that can amplify concerns about financial security in retirement.”
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. There are some inklings that the NUSI foundation will prove beneficial to investors beyond 2020.
NUSI is meaningful for younger workers, too, because some old guard retirement sources face significant challenges.
“The latest Social Security Trustees Report indicated that Social Security’s trust funds would be depleted by 2035 if the government made no changes to the program. The COVID-19 pandemic and subsequent recession could accelerate this deadline, but in either case, Social Security won’t disappear. The Trustees Report predicts that Social Security could still payout 76% of scheduled benefits until 2090,” according to Fox Business.
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.
For more on income strategies, visit our Retirement Income Channel.