It’s year end – a great time for advisors to reconnect with clients to review financial plans and asset allocation strategies for the coming year. For those seeking high current income in today’s low interest rate environment, the Fed’s “lower-for-longer” outlook creates a unique set of challenges.
In the upcoming webcast, Targeting High Monthly Income and Lower Risk, Mark Hackett, Chief of Investment Research, Nationwide; Julie Ragatz Norton, Director, Nationwide Retirement Institute, Nationwide; and Curt Brockelman, Co-Founder and CIO, Harvest Volatility Management, will discuss strategies designed to generate income and manage risk while raising awareness of cognitive biases that may impact decision making.
Specifically, the Nationwide Risk-Managed Income ETF (NYSEArca: NUSI) can help investors target high current income with less risk relative to traditional income-focused investments. The fund strategy seeks to provide some downside protection while maintaining upside potential. Harvest Volatility Management sub-advises the fund.
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 covered call refers to an options strategy where an investor writes or sells a call option on an asset which they already own or bought on a share-for-share basis to generate income via premiums derived from the sale of the call options.
A protective put is an options strategy where an investor purchases a put option on an asset which they already own or bought on a share-for-share basis to limit potential losses. The protective put will cause profits derived from the strategy to be reduced by the premium paid for the put, but it limits the maximum potential losses.
The ETF will try to achieve high monthly income generation, portfolio volatility reduction, reduced duration risk, and interest rate sensitivity, capital appreciation from equity participation, downside risk mitigation, and enhanced tax efficiency of index options.
Financial advisors who are interested in learning more about managing risk in a fixed-income portfolio can register for the Wednesday, December 2 webcast here.