Employer-sponsored retirement plans, such as 401(k)s, are important parts of the retirement planning equation, and workers with access to those plans should take advantage of them, but they don’t complete the retirement income puzzle. Investors can tap the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) to fill in those holes.
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.
“If you share that worry, you might be thrilled to hear that more employers are showing interest in providing annuity-based lifetime income options within their 401(k)s. This would allow you to convert your 401(k) savings into a stream of retirement income that will last as long as you do,” reports USA Today.
That’s one option, but it’s not a free lunch as it comes with risks and fees not found with NUSI.
Consider NUSI Instead of Cumbersome Conversions
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.
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.
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.
However, in unprecedented times of panic, when people are scrambling to do anything to make ends meet, investors have shown the tendency to take on more risk or make less prudent investment choices. NUSI can even out this scenario, too, because it offers a blend of growth and income rarely found with income-generating funds.
For more on income strategies, visit our Retirement Income Channel.