More data points confirm employees need assistance with retirement planning. That a burden the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can ease.
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 aids in solving in one of the most vexing problems advisors and investors face today: Ensuring an adequate income stream in retirement.
“Roughly 33% of retirement plan participants are not sure how long their retirement savings will last, according to Charles Schwab’s “2020 401(k) Participant Survey” of 1,000 currently employed 401(k) plan participants. This uncertainty jumps to 40% for women, compared with only 25% of men,” reports Lee Barney for PlanAdviser.
NUSI Income Stream Matters Today
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.
“Those interested in getting financial advice say they would like help with: planning for retirement (39%), figuring out tax expenses (34%), knowing when is the best age at which to retire (33%), creating a retirement income stream (33%) and knowing how to invest their 401(k) balance (32%),” according to PlanAdviser.
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’s relevance increases when considering from where retirees are expecting to generate income.
“After their 401(k), survey participants said they think 17% of their retirement income will come from Social Security, 15% from savings and investments, 10% from a pension and 4% from part-time work. Many are using accounts outside the workplace to save for retirement, with 57% using a savings account, 48% an individual retirement account (IRA) and 38% a brokerage account,” according to PlanAdviser.
For more on income strategies, visit our Retirement Income Channel.