Replacing the income lost from from not working is one of the most important tasks investors face, particularly at the present. The Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can help.
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.
“A recent study conducted by Boston College’s Center for Retirement Research used replacement rate, or the ratio of a worker’s retirement income to their pre-retirement income, to measure retirement readiness among both traditional and nontraditional workers in their 60s,” according to ThinkAdvisor. “The study found that workers who are underprepared for retirement — and therefore choose to work past the age of 62 — see a clear improvement in their retirement readiness by ages 67 or 68.”
NUSI Replenishes Your Retirement Income
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.
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.
“Researchers found surprising is that the gain in retirement readiness (measured by the replacement rate) for those who switch from traditional to nontraditional work is actually slightly greater than the increase for those who stay in traditional work,” reports ThinkAdvisor.
NUSI is also important in an environment where projecting future returns is increasingly tricky and forecasts don’t always jive with reality.
Covered call strategies can potentially augment a portfolio during periods of heightened volatility. The covered-call options allow an investor to hold a long position in an asset while simultaneously writing, or selling, call options on the same asset.
Lastly, NUSI can augment income and stabilize volatility in portfolios that are evenly split between equities and fixed income assets.
For more on income strategies, visit our Retirement Income Channel.